Thinking | 7 September 2011
ASIC Consultation Paper 163: Unlisted property schemes: Update to RG 46
Introduction and summary
The unlisted property fund industry is the latest to receive a new range of proposals aimed at improving disclosure to retail investors. ASIC has published its proposals in Consultation Paper 163: Unlisted property schemes: Update to RG 46 (CP 163) (released on 12 July 2011). This follows earlier proposals made by ASIC aimed at improving prospectus disclosure (Consultation Paper 155 Prospectus disclosure: Improving disclosure for retail investors (CP 155)). CP 163 sets out ASIC’s proposed amendments to RG 146 Unlisted property schemes—improving disclosure for retail investors (RG 46).
An unlisted property scheme is defined in CP 163 as an unlisted managed investment scheme that has, or is likely to have, at least 50% of its non-cash assets in real property (not including infrastructure assets) and/or other unlisted property schemes.
Responsible entities of unlisted property schemes have been the subject of ongoing review by ASIC since the release of RG 46. CP 163 seeks to address issues ASIC has identified during its ongoing review. Specifically, ASIC has concerns regarding responsible entities’ inadequate disclosures of:
- risks associated with the borrowing maturity profile and the extent of hedging
- property development activities (timetables and funding)
- reasons for paying distributions from sources other than income, and the sustainability of doing this and
- withdrawal rights and the risks associated with withdrawal arrangements promoted to investors.
ASIC was also concerned with the effectiveness of disclosure documents. ASIC found that several responsible entities had issued disclosure documents that incorrectly referenced other sections and documents, making it difficult for investors to adequately make comparisons between like products.
ASIC’s proposals include:
- The introduction of disclosure benchmarks which responsible entities must address on an ‘if not, why not’ basis. The benchmarks address six key issues including: gearing policy, interest cover policy, interest capitalisation valuation policy, related party transactions, and distribution practices.
- Clarification and amendment to the existing disclosure principles to accord with the disclosure benchmarks and address some of the disclosure concerns ASIC has identified.
- Further guidance on how responsible entities can make their disclosures ‘clear, concise and effective’, by the introduction of an ‘Investment Overview’ like ASIC’s proposed change to guidance on prospectus disclosure issued earlier this year.
ASIC has sought comment on its proposals (the deadline for submissions is 6 September 2011) with a view to releasing an updated RG 46 by December 2011 and requiring that responsible entities comply with the new guidance by 1 July 2012.
ASIC proposes to extend to unlisted property schemes its ‘if not, why not’ benchmark disclosure model used in Regulatory Guide 69 Debentures and unsecured notes: Improving disclosure for retail investors (RG 69) and Regulatory Guide 45 Mortgage schemes – improving disclosure for retail investors (RG 45). This model of disclosure provides concrete standards by which retail investors can assess financial products for which there are typically few external benchmarks. The benchmark disclosure model:
- identifies, for a particular financial product, the key risk areas potential investors should understand before making a decision to invest
- sets a benchmark for how a product issuer should address these risks in establishing its business model and compliance procedures and
- involves an issuer stating in the PDS and other disclosure whether it meets the benchmark, and if not, why not.
The benchmarks set out above are in addition to the existing disclosure principles contained in RG 46 (which ASIC proposes to amend as set out below).
Amendments to Disclosure Principles in RG 46
ASIC proposes to amend RG 46 to clarify several issues and provide further guidance as to its expectations of responsible entities in applying the disclosure principles.
|Court||Changes to Court Procedure||Timeframe for Changes||Contact Information||Date|
|All Jurisdictions||Anyone required to self-isolate MUST NOT attend the Court precinct. All Court visitors are to adhere to the various state and territory health guidelines, and at all times follow the instructions of Court staff.||In effect from 18 March 2020 indefinitely||24/03/2020|
|High Court of Australia||The High Court of Australia will not sit during April, May or June.|
It will continue to deliver judgments and deal with special leave applications and hearings by videolink.
Documents to be filed for cases commenced before 1 January 2020 to be emailed as a PDF attachment to relevant Registry Office.
|In effect from 18 March 2020 indefinitely|
Further updates regarding sittings are expected for June.
|Court Website: https://www.hcourt.gov.au/||24/03/2020|
|Federal Court of Australia||The Federal Court building has been closed. The Court has vacated all listings for in person appearance up to 30 June 2020.|
All face to face contact has been closed, and registries will be providing remote services and support to practitioners.
All documents should be lodged by eLodgement. Wherever possible, hard copy documents should not be posted or hand delivered to the registry.
The Court will accept the filing of unsworn affidavits, on the understanding that if required, these will be sworn or affirmed at a later stage when circumstances allow.
Document viewing is by appointment only, but practitioners should only request an appointment to view materials if it is truly necessary. As a general guide, the Court will consider if the matter is scheduled for hearing in the subsequent four weeks, or is otherwise urgent.
The Federal Court will contact parties with listed hearings up to 30 June 2020 directly to confirm new arrangements. The Court will endeavour to contact parties at least two weeks prior to the scheduled hearing.
The Court will endeavour to handle short listings on the papers or by audiovisual conference wherever possible. Some longer listings will also be accommodated using similar technology.
|In effect from 18 March 2020 to 30 June 2020||Court Website: https://www.fedcourt.gov.au/|
|Family Court and Federal Circuit Court||All documents should be e-filed and or emailed to the relevant registry.|
Viewing of subpoenas is by appointment only. Parties should only request to view documents if the matter is scheduled for hearing in the next four weeks.Trials and hearings should be conducted by telephone wherever possible. Parties will be notified before the hearing as to the process for the proceeding.Matters may be adjourned if not practicable via telephone and non-urgent. Matters that are not practicable via telephone, and urgent, will proceed face to face with social distancing.
|In effect from 23 March 2020 indefinitely.||24/03/2020|
|Australian Administrative Tribunal (AAT)||Parties who have hearings, conferences and other events scheduled on premises from 23 march 2020 are being contacted to make alternative arrangements.|
AAT business should be conducted online wherever possible.
|In effect from 23 March 2020 indefinitely||24/03/2020|
|NSW Supreme Court||Registrar’s Lists will be conducted by Online Court where available, or by telephone link. Contentious matters will be conducted by Online Court or videolink. Practitioners are o email short minutes of orders to the Registrar no later than 4:00pm the day before the scheduled directions.|
Judges’ Lists will be conducted in the same approach, subject to specific directions given by the judge administering the list.
All personal appearances have been altered to online or videolink. The Court will contact parties in relation to future listings to advise of specific arrangements.
All documents are to be provided electronically, through Online Court, E-Subpoena or Online registry. Where those facilities do not exist, documents will be received by email.
Face-to-face annexed mediations will be suspended and held by teleconference.
|In effect from 23 March 2020 indefinitely||Court Website: http://www.supremecourt.justice.nsw.gov.au/|
Virtual Courtroom information: http://www.supremecourt.justice.nsw.gov.au/Documents/Home%20Page/Announcements/Fact%20Sheet%20-%20Practitioners.pdf
|NSW District Court||The Court will utilise online court, audiovisual link and digital technology to continue as many matters as possible. No Civil trial will commence on 24 March 2020 until further notice. Proceedings can be initiated electronically.|
Judges’ Lists will be managed by interval sittings. Parties must only attend John Maddison Tower for their listing at the allocated time. Parties must not enter the Courtroom allocated for the listing until the matter is called.
General List managed by the Judicial Registrar in Court 7D will be conducted by Online Court. If Online Court is not available for the matter, it will be conducted by telephone directions.
Motions Lists managed by Assistant Registrars will be conducted by Online Court. Where Online Court is not suitable, by attending Court 4A at the allocated time.
|In effect from 18 March 2020 indefinitely|
An update is expected on 25 March 2020.
|Court Website: http://www.districtcourt.justice.nsw.gov.au/|
To attend a listing by telephone, dial the number and use the PIN at the time allocated for the listing
Dial: 1800 062 923
PIN: 7762 8770 9768
|NSW Local Court||Practitioners will be allowed to appear via telephone for small claims hearings, review lists, directions list and motions list.|
Any hearings listed between 23 March 2020 and 1 May 2020 have been vacated and listed for mention in the week of 4 May 2020.
The Local Court has set aside the month of October 2020 to catch up with a backlog that builds up under these arrangements.
Proceedings where the defendant does not respond will be adjourned until June 2020.
|In effect from 18 March 2020 indefinitely||Court Website: http://www.localcourt.justice.nsw.gov.au/||24/03/2020|
|NSW Civil and Administrative Tribunal (NCAT)||Directions, Conciliation conferences and most interlocutory proceedings will be conducted where possible by phone or AVL. Precise arrangements will be provided separately.|
Consumer and Commercial Division Group Lists with multiple parties will be reorganised to reduce the need for parties to attend.
From 23 March 2020, all Group lists are suspended until further notice.
|In effect from 18 March 2020 indefinitely|
Additional precautions in effect from 23 March 2020 indefinitely
|Court Website: https://www.ncat.nsw.gov.au/||24/03/2020|
|ACT Supreme Court||All Registrar and Deputy Registrar Lists will be conducted by teleconference or videolink. Further information will be provided to legal representatives and parties.|
If compulsory attendance is required, and you are required to self-isolate, contact the Registry team in advance of the hearing to make alternative arrangements.
Civil Directions Hearings will be heard by videolink or teleconference.
All documents should be filed via eLodgement via firm’s creating registering in the portal. Firms must provide a central email contact for each firm to correspond with the Court. Each firm is also to provide practitioner and litigant contact information for each matter.
The Court will send out a Webex meeting invite to the central email address for each listing that the firm has. It is the firm’s responsibility to invite the appropriate solicitors and practitioners for the appearance.
|In effect from 17 March 2020 indefinitely||Court Website: https://www.courts.act.gov.au/supreme|
email@example.com or (02) 6205 0000 at least one business day prior to listing to make arrangements
|ACT Magistrates Court||All Listings Hearings, Civil Directions, Civil Settlements, Civil noncompliance and Return of Subpoenas will be conducted by telephone or videolink.|
Parties should provide the registry, by email, any document they intend to put before the Court.
Parties should also provide the Court, by 3:00pm the day before a list, the preferred method of contact, and any details for that contact.
Civil final hearings scheduled between 23 March 2020 and 3 April 2020 (inclusive) have been vacated, and will be mentioned by phone on the day of listing unless adjourned or otherwise finalised.
|In effect from 17 March 2020 indefinitely||Court Website: https://www.courts.act.gov.au/magistrates/home|
firstname.lastname@example.org or (02) 6205 0000 at least one business day prior to make arrangements
|SA Supreme Court||Before Masters: All directions hearings will be conducted by email. All arguments will be dealt with on the papers by email. All communications must be received by the Court before the scheduled time and date of the hearing. Records of Outcomes will be sent by email to parties.|
Settlement conferences should be held by telephone or another agreed method. The Court will then hold a (by email) directions meeting to be advised of the result and issue further orders.
Before Justices: Follow the instructions given by individual chambers.
|In effect from 17 March 2020 to 9 April 2020.|
An update will be provided by 27 March 2020.
|Court Website: http://www.courts.sa.gov.au/Pages/default.aspx||24/03/2020|
|SA District Court||Before Masters: All non-contentious matters will be conducted by email. All emails are to be received by chambers before the close of business the day before the hearing. If parties cannot agree to consent orders, they will attend court and follow social distancing protocols.|
No documents are to be handed up in court. All documents should be sent to chambers before the hearing.
Settlement conferences are to be held at an alternative venue. The Court will then hold a (by email) directions meeting to be advised of the result and issue further orders.
Before Judges: Follow the instructions given by individual chambers.
|In effect from 18 March 2020 to 9 April 2020.|
An update will be provided by 2 April 2020.
|Court Website: http://www.courts.sa.gov.au/Pages/default.aspx||24/03/2020|
|Victorian Supreme Court||The Court of appeal will hear all appeals by videolink. Where appropriate, matters will be determined “on the papers” through the filing of written submissions.|
Commercial directions and interlocutory applications will be heard by consent orders, or videoconferencing or ‘on the papers’ where consent orders are not possible. Trials will be conducted remotely, with short trials given preference.
Common Law proceedings will proceed before a judge only, using remote telephone or videoconferencing for parties, counsel and witnesses.
Mediations should take place by video or phone teleconferencing.
|In effect from 23 March 2020 indefinitely.|
Parties in Commercial and Common Law cases listed before 14 April 2020 will be contacted by the Court.
|Court Website: https://www.supremecourt.vic.gov.au/||24/03/2020|
|Victorian County Court||The Common Law and Comemrcial Divisions will hear judge alone matters of short duration via videoconference.|
All Court Divisions will conduct hearings via videolink or teleconferencing, or on the papers.
|In effect 23 March 2020 indefinitely.|
Further updates are expected.
|Court Website: https://www.countycourt.vic.gov.au/|
Common Law Division: 03 8636 6515
Commercial Division: 03 8636 6690
|Victorian Magistrates’ Court||The Court continues to remain open and operational. AVL technology will be used to limit in-person appearances, as will telephone appearances where appropriate|
Matters may be adjourned outside of the usual protocols at the discretion of Magistrates, Judicial Registrars and Registrars.
Matters listed for mention in the week commencing 23 March 2020 will be mentioned for the purposes of adjourning, and thereafter, matters for the following seven weeks will be the subject of further communications.
All contested matters will be adjourned, New proceedings can be issued electronically, and the stages of case management are to be undertaken by electronic means.
|In effect from 18 March 2020 until 11 May 2020.|
Further updates are expected.
|Court Website: https://www.mcv.vic.gov.au/||24/03/2020|
|Victorian Civil and Administrative Tribunal (VCAT)||VCAT has closed its venues. No face-to-face hearings have been scheduled, and all non-critical matters up to and including 17 April 2020 are adjourned for the foreseeable future.|
Some critical matters will be held by telephone. In this event, the Tribunal will contact parties.
|In effect from 17 March 2020 indefinitely.|
Further updates are expected before 17 April 2020.
|Court Website: https://www.vcat.vic.gov.au/||24/03/2020|
|Tasmanian Supreme Court||No change to procedures for Civil cases yet.||Court Website: https://www.supremecourt.tas.gov.au/||24/03/2020|
|Tasmanian District Court||No changes to procedure yet.||Court Website: https://www.magistratescourt.tas.gov.au/||24/03/2020|
|WA Supreme Court||The Court remains open, except the Court of Appeal. All documents are to be filed electronically.|
Case Management and Directions hearings will be conducted by telephone.Parties are to continue to attend civil trials in person. If the trial cannot be held under the circumstances of social distancing, it will be vacated. The Registry has been closed to the public with all documents to be filed electronically.No new mediations will be listed until 31 May 2020. Personal attendance at mediation hearings is not required, subject to individual judicial officers. Arrangements will be made for appearances by telephone.
|In effect from 19 March 2020 indefinitely.|
Updates of mediation to be provided before 1 May 2020.
|Court Website: https://www.supremecourt.wa.gov.au/||24/03/2020|
|WA District Court||The Court remains open. All documents are to be filed electronically.|
Parties are to appear at a pre-trial conference unless it is agreed that all parties attend the pre-trial conference at another venue to be agreed outside of the Court.
|In effect from 17 March 2020 indefinitely||Court Website: https://www.districtcourt.wa.gov.au/default.aspx||24/03/2020|
|WA Magistrates Court||The Court remains open. Documents should be filed electronically through the Electronic Document Management System (EDMS).|
At the discretion of judicial officers, hearings other than trials may be conducted by telephone.
|In effect from 24 March 2020.||Court Website: https://www.magistratescourt.wa.gov.au/default.aspx||24/03/2020|
|Queensland Supreme Court||The Judge presiding over particular matters will determine whether the matter will be heard by telephone or videolink. Where possible, parties will be advised in advance of the preferred manner of hearing the matter. Currently. Telephone conferencing through the Chorus Call Telephone solution is preferred, with videoconferencing limited to contentious matters.||In effect from 23 March 2020 indefinitely.|
Further updates are expected.
|Court Website: https://www.courts.qld.gov.au/||24/03/2020|
|Queensland District Court||The Court remains open and operational. All civil applications will be staggered at half-hourly intervals, starting at 9:30am.||In effect from 23 March 2020 indefinitely||Court Website: https://www.courts.qld.gov.au/||24/03/2020|
|Queensland Magistrates Court||Brisbane Magistrates Court: All callovers will be conducted on the papers, without appearances from legal representatives with matters adjourned for three months from the date of listing.|
All matters currently listed for hearing will be adjourned on the papers subject to any application to hear a matter by telephone or other electronic means.
|In effect from 18 March 2020 indefinitely||Court Website: https://www.courts.qld.gov.au/||24/03/2020|
Form of disclosure
ASIC proposes to provide additional guidance on how responsible entities can word and present PDSs and other disclosure documents in a ‘clear, concise and effective’ manner to help retail investors assess the offer and make informed investment decisions.
Clear, concise and effective
ASIC intends that RG 46 will be consistent with its guidance proposed in Consultation Paper 155 Prospectus disclosure: Improving disclosure for retail investors (CP 155), that is, a PDS will be clear, concise and effective if it helps retail investors make informed decisions because it:
(a) highlights key information
(b) uses plain language
(c) is as short as possible
(d) explains complex information, including any technical terms and
(e) is logically organised and easy to navigate.
ASIC also proposes to refer to the guidance in CP 155 on the use of communication tools that can help responsible entities to word and present PDS information in a clear, concise and effective manner.
ASIC proposes that an investment overview is included at the beginning of a document which highlights information key to the investor’s decision to invest. This should contain disclosure of the benchmark and disclosure principle information. ASIC’s stated aim is to ‘change market practice’ so that issuers provide retail investors with one balanced summary in the form of an investment overview.
ASIC has also stated that all disclosure and ongoing disclosure documents should be dated so as to allow investors to assess the currency of the data within such documents.
Some in the industry have endorsed ASIC’s proposal because it would instil confidence in new and existing investors. However, ASIC’s proposal has also been criticised because it makes the assumption that unsophisticated investors can understand and respond to quite subtle disclosures.
Most responsible entities as a matter of good practice (and arguably to comply with existing legal requirements) already make substantial disclosures in line with what ASIC has suggested (although not necessarily in the order and manner that ASIC proposes). However, the proposals are likely to impose an increased time and compliance cost burden on responsible entities to change disclosure processes and systems.
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