ASIC today released a consultation paper proposing updates to current guidance to help facilitate email and internet distribution of offers of securities. A draft regulatory guide has also been proposed.
Consultation Paper 211, Facilitating electronic offers of securities: Update to RG 107 (CP 211), which proposes updates to Regulatory Guide 107 Electronic Prospectuses (RG 107), aims to ensure that ASIC's guidance reflects current market practices and technological advancements.
The proposed updated guidance includes:
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an explanation of ASIC's view on the way the internet and other means of electronic distribution can be used in making offers of securities
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good practice guidance to assist persons using electronic distributing offers of securities via electronic means, and
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continuation of relief for the use of personalised or AFS licensees created application forms.
ASIC Commissioner John Price said, ‘Investors have increasingly been using the internet and electronic devices to receive important information. We want to ensure that our policy reflects these developments and assists companies using these platforms to comply with the law.
'Consistent with our focus on confident and informed investors, we have proposed a number of good practice suggestions to encourage disclosure in a way that promotes investor confidence', Mr Price said.
A key part of the update is clarifying to what extent electronic distribution of prospectuses is permitted under the law.
The proposed guidance clarifies that ASIC relief to make electronic offers is not needed in many instances and we propose to revoke class order Class Order [CO 00/44] Electronic disclosure documents, electronic application forms and dealer personalised applications for electronic prospectuses because it is unnecessary.
Submissions to CP 211 are due by 12 August 2013.
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Background
ASIC's view on the way the internet and other means of electronic distribution can be used in making offers of securities can be found under Chapter 6D of the Corporations Act.
An offer of security is an offer for issue or sale of shares, debentures or options and includes inviting applications and inviting offers to purchase.
In April 2011 ASIC released Consultation Paper 155 Prospectus disclosure: Improving disclosure for retail investors (CP 155) in order to improve disclosure documents under chapter 6D of the Corporations Act. As part of this consultation we asked questions to help us determine whether further ASIC guidance may be needed to facilitate the use of the internet and other electronic technologies to distribute disclosure documents.
In November 2011, ASIC released Report 261: Response to submissions on CP 155 Prospectus disclosure: Improving disclosure for retail investors (REP 261) which provided a summary of the submissions received in response to CP 155. Some submissions we received in relation to the questions on electronic prospectuses included:
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ASIC’s existing relief and guidance needs to be updated to reflect advances in technology
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some more guidance should be provided by ASIC in relation electronic prospectuses
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clarification is needed on the application of CO 00/44 on the basis that there is some industry uncertainty as to whether class order relief is actually needed, and
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paper prospectuses should not be discontinued because some investors do not have adequate access to the internet.
In REP 261, we considered that the issues involved in electronic offers of securities under chapter 6D of the Corporations Act were complex and, as a result, more extensive revisions and consultation would be required to advance any changes to our guidance or relief. CP 211 is the more extensive review and consultation envisaged in REP 261.