Corporations and their lawyers can expect to see increased direct action from regulators, according to Jane Eccleston, senior manager, corporations, for the Australian Securities and Investment Commission (ASIC). Eccleston made the comment while assessing the role ASIC plays in ensuring investors are confident and informed, one of its stated priorities, during the opening remarks of the Chartered Secretaries Association (CSA) conference which began in Sydney this morning. “It’s likely that we’re going to continue to send some direct messages to the market where we continue to see some more risky or complex products specifically targeted at retail investors,” she added.
Eccleston also said half the role of an organisation such as ASIC is about education and the other half related to the conduct of issuers, another area where ASIC has offered guidance last month with regards to prospectus disclosure requirements following extensive consultation – a move which was well received by the market according to her. Apart from launching an information website called Money Smart aimed at educating investors, ASIC has recently tried to encourage listers to disclose much more thoroughly the business models they’re adopting and the risks that are associated with these.
One area in particular where Eccleston said she expected ASIC will be involved over the next year is with so-called ‘low-doc’ capital raisings, where companies look to recapitalise themselves based on ‘low-doc’ means. “You’re likely to see more of ASIC in this space,” she warned. “One of the issues we’re concerned about is ‘do all investors have the same information, or do some investors have more than others?’ Are investors being misled?
In terms of what is coming in the immediate future, Eccleston also said ASIC is preparing to issue guidance notes on underlying profits, assisting issuers on how to avoid misleading investors, and will continue to outline what it expects of directors in light of the Centro case and other significant cases.”We’re also concerned to ensure that companies adopt proper processes, particularly with respect to new remuneration laws, which is an area those cases have really focused attention on at this time” she added, mentioning that voting exclusions are another area ASIC is focused on at this particular point in time. “It’s going to be a mixture of addressing fundamental issues, but also trying to ensure that there’s incremental improvements in Australia’s regulatory system. The GFC demonstrated that we have a world class regulatory system here in Australia, but this is not the time to be complacent with that,” she concluded.
