ASIC Report

  • Date:01 Nov 2007
  • Type:CompanyDirectorMagazine

More steps to cut regulatory burden


ASIC is seeking industry comment on two recent policy proposals aimed at reducing the regulatory burden on business.

The first proposal seeks to encourage rights issues as a means of fundraising and the second simplifies the reporting processes for entities regulated by both ASIC and the Australian Prudential Regulation Authority (APRA).

Rights issues

We are seeking industry views on our proposal to widen the disclosure exemption for rights issues to cover non-traditional features developed by issuers and their advisers to raise capital more effectively.

The disclosure exemption for rights issues was introduced by the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007, allowing listed entities to conduct a rights issue without a prospectus or product disclosure statement (PDS) disclosure.

The exemption is intended to benefit retail holders by encouraging listed entities to use rights issues. Issuers generally prefer a method of raising capital that does not involve preparing a prospectus or PDS if available and so the exemption creates an incentive for listed entities to use rights issues rather than placements to institutional investors.

Some rights issues would not qualify for the disclosure exemption without our relief (for example, because they involve minor or temporary inequalities in the timing of the offer). Therefore, we have proposed the widening of the exemption. Our proposal would extend the disclosure exemption to rights issues that allow accelerated institutional participation and other deviations from the ‘vanilla’ rights issue format, provided there is an effectively equal opportunity for all holders to participate.

We want to accommodate current market practice for rights issues so that the disclosure exemption is of maximum benefit to listed entities and their members and the underlying rationale of the exemption is fulfilled.

Breach reporting

Our second policy initiative relates to a proposed online breach reporting system for entities regulated by both ASIC and APRA.

The proposal aims to simplify how dual-regulated entities report breaches and to reduce breach reporting duplication.

The proposed system will enable those entities to report breach notifications through a single online breach report to APRA. This will eliminate the need for jointly regulated entities to provide separate breach reports for the same incident to both regulators.

The cooperation between APRA and ASIC on this initiative demonstrates the joint regulatory effort to achieve better outcomes for regulated entities.

Breach notifications provide both regulators with valuable information to help identify emerging trends or issues, as well as alerting us to specific breaches of the law.

The proposal follows the recent passage through Parliament of the Financial Sector Legislation Amendment (Simplifying Regulation and Reform) Act 2007. The Act introduces a consistent definition of reportable breaches across all entities in APRA-regulated industries and all ASIC-regulated Australian financial services licensees.

These two proposals highlight the commitment of Australia’s key economic regulators to streamline regulation.


Consultation papers on these two proposals, as well as review a copy of the draft breach notifi cation forms for the joint ASIC/APRA proposal at: www.asic.gov.au/cp