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Regulatory watch

Managed investment schemes

ASIC has issued an information release to provide guidance to industry release in the operation of managed investment schemes. The participants deals with the following:

  • roll over of prospectus post CLERP Act 1999. A continuous issuer can have overlapping disclosure documents on issue at the same time for the same scheme(s);
  • a prospectus that is lodged with ASIC must be signed by the director or secretary of the responsible entity of the registered scheme;
  • confirmation that associate loans are excluded from the calculation of the net tangible assets where the loan is made to facilitate investments by the members in the scheme; and
  • the conditions where an investor may utilise trade dollars from a barter exchange to acquire interests in the scheme.

(Source: ASIC Date 18/01/01 Ref: IR01/01. For more, see the information release)

Proposed listing of managed funds

ASX is proposing to list all managed funds on the stockmarket. This would allow investors to purchase such funds directly through stockbrokers. According to ASX, listing has the advantages of:

  • reducing paperwork on applications and redemption of funds;
  • lower costs and greater efficiency; and
  • providing more information on the funds.

(Source: AFR, 21/03/01)

PJSC cries freedomf or proprietary companies

The First Corporate Law Simplification Act 1995, changed the financial reporting requirements for proprietary companies by replacing the previous distinction between exempt and non-exempt proprietary companies, making a distinction between large and small proprietary companies based on the company's assets, revenue and employees.  In its inquiry into the new reporting system, the Parliamentary Joint Statutory Committee on Corporations and Securities (PJSC) found that the system was too complex, onerous and created unnecessary compliance costs. It recommended that:

  • the previous distinction between exempt and non-exempt proprietary companies be reinstated, to replace s45A of the Corporations Law. The committee favoured the reinstatement of the previous test of 'exempt proprietary company' to reflect the 2 broad types of proprietary companies (family-owned companies and subsidiaries of disclosing entities).
  • all directors of proprietary companies be required to sign and lodge a declaration of solvency with their annual reports.
  • entities lodging financial statements should comply with minimum requirements of the Accounting Standards, in order to ensure that financial statements are prepared on a comparable basis. 
  • both reporting and non-reporting entities apply all of the recognition and measurement requirements of the Accounting Standards.
  • all company financial statements that are required to be lodged with ASIC, should be required to be audited. 

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Fundamentals are just as important

In a speech to the Corporate Law Teachers Association, Jillian Segal the Deputy Chair of ASIC, indicated how ASIC views its role as a regulator in the transition to the new economy. In the case of e-commerce, ASIC will concentrate on achieving the public policy outcomes of protecting consumers and ensuring market integrity through the enforcement of existing rules and translating a legislative framework with paper based transactions and dealings to a digital world.

(Source: ASIC Speeches, "Brave New World or Return to Fundamentals". For more, see the speech)

Amendments to ASX listing rules - ASX responds

After receiving submissions on its proposed changes to the Listing Rules, the ASX has revised some of its proposals. 
The revised proposals include:

  • in relation to changes to continuous disclosure requirements:
    - ASX has indicated that there can be more than 1 person who will be responsible for communication with ASX;
    - ASX will proceed with the requirement that entities who are also listed on overseas exchanges should provide ASX  with a copy of any financial documents lodged with an overseas exchange or regulator that is likely to be material information under the Rules;
  • in relation to notification of directors' holdings and interests, an entity is required to:  
    - notify ASX of any information relating to directors' holdings of securities and changes to those holdings (subject to a materiality threshold);    
     - notify ASX within 5 business days after the date of the transaction;  
     - enter into arrangements with its directors requiring the director to disclose to the entity all the information it needs to comply with its obligation to notify ASX; and  
     - no disclosure is necessary if the entity does not have the information.
  • addition of policies relating to securities trading by directors and employees, including trading windows as part of the Corporate Governance Guidance Note.

A further discussion paper will be circulated to obtain views on the appropriate materiality threshold, electronic lodgement of notifications and the timeframe for the introduction of the rule.