25 February, 2012
- Regulatory Guide 231 (RG 231) introduces nine disclosure benchmarks and 11 disclosure principles that apply to disclosure to retail investors in listed and unlisted infrastructure entities. Disclosure against the benchmarks and principles is not mandatory, but represents ASIC's guidance on information that would reasonably be expected to be included as part of an infrastructure entity's disclosure.
- The Australian Securities and Investments Commission (ASIC) expects affected entities to update their product disclosure statement (PDS) or prospectus (if one is in use), or otherwise to disclose against the benchmarks and disclosure principles by way of regular investor updates or website disclosure (where no PDS or prospectus is in use), by 1 July 2012.
- New PDSs and prospectuses dated on or after 1 July 2012 should reflect the new benchmarks and principles, and material changes to an infrastructure entity's performance against the benchmarks, or in the disclosure principle information, should be dealt with as part of the entity's general ongoing disclosure obligations.
Topic |
Benchmark |
---|---|
Corporate structure and management |
The infrastructure entity's corporate governance policies and practices conform with ASX Listing Rules Guidance Note 9A, which provides for transparency about the context within which directors and other officeholders fulfil their duty to prioritise the interests of investors; or, for a company, the company as a whole. |
Remuneration of management |
Incentive-based remuneration paid to management is derived from the performance of the infrastructure entity. |
Classes of units and shares |
All units or shares are fully paid and have the same rights. |
Substantial related party transactions |
The infrastructure entity complies with ASX Listing Rule 10.1 for substantial related party transactions. (Listing Rule 10.1 requires an entity to obtain member approval for certain transactions with related parties and associates.) |
Cash flow forecast |
The infrastructure entity has, for the current financial year, prepared and had approved by its directors:
|
Base-case financial model |
Before any new material transaction, and at least once every three years, an assurance practitioner performs an agreed-upon procedures check on the infrastructure entity's base-case financial model. |
Performance and forecast |
For any operating asset developed by the infrastructure entity, or completed immediately before the infrastructure entity's ownership, the actual outcome for the first two years of operation equals or exceeds any original publicly disclosed forecasts used to justify the acquisition or development of that asset. |
Distributions |
If the infrastructure entity is a unit trust, it will not pay distributions from scheme borrowings. |
Updating the unit price |
If the infrastructure entity is an unlisted unit trust, after finalising a new valuation for an infrastructure asset, the infrastructure entity reviews, and updates if appropriate, the unit price before issuing new units or redeeming units. |
Disclosure principle |
Description |
---|---|
Key relationships |
Recommends disclosure of an entity's key relationships (eg controlling arrangements), including for significant infrastructure assets under development. |
Management and performance fees |
Recommends disclosure of how management fees and performance fees will be paid and the justification for those fees. |
Related party transactions |
Recommends disclosure of arrangements with related parties, including:
|
Financial ratios |
Recommends disclosure of an infrastructure entity's publicly disclosed target financial ratios (if any) and actual financial ratios, and how investors can use these ratios (eg to assess an entity's level of debt). |
Capital expenditure and debt maturities |
Recommends disclosure of planned capital expenditure for the next 12 months, and how this is to be funded; and information on debt finance (including drawn and undrawn amounts, the weighted average interest rate, material debt maturities and whether the debt is limited recourse debt). |
Foreign exchange and interest rate hedging |
Recommends disclosure of foreign exchange and interest rate hedging policies, and whether the actual foreign exchange and variable interest rate exposure conforms with these policies. |
Base-case financial model |
Recommends disclosure of various aspects of an entity's base-case financial model (eg the assumptions underlying the model and details of the agreed-upon procedures check by an assurance practitioner), an analysis of the effect on the infrastructure entity if key assumptions were to be materially less favourable than expected, and details about the operation of the entity's significant operating assets. |
Valuations |
Recommends disclosure of information relating to valuation, including details of an entity's valuation policy; whether valuations, or a summary of valuations for significant infrastructure assets, are available to investors; and any potential conflicts of interest that may arise in the preparation of valuations. |
Distribution policy |
Applies to infrastructures entities that are unit trusts, and recommends disclosure of the entity's distribution policy, the source of distribution payments and the risks associated with distributions being paid from sources other than operating cash flow. |
Withdrawal policy |
Applies to infrastructure entities that are unlisted trusts, and recommends disclosure of information relating to withdrawals, including the entity's withdrawal policy, how investors will be notified of changes to this policy and risks that may affect investors' ability to withdraw their money. |
Portfolio diversification |
Recommends disclosure of an infrastructure entity's portfolio diversification policy, its actual portfolio diversification position and an explanation for any material variances between these positions. |
- issue a new or a supplementary PDS or prospectus, including the benchmark and additional disclosure-principle information; or
- if the entity is a managed investment scheme, include the benchmark and additional disclosure-principle information on a website referred to in the PDS (provided the requirements for such disclosure in ASIC Class Order [CO 03/237] are met). These requirements include that the information is not information of a kind required to be included in a supplementary PDS in order to correct a deficiency under the Corporations Act 2001 (Cth)).
- regular investment updates;
- periodic statements under section 1017D of the Corporations Act; or
- website disclosure.