Insights

03/08/17

ASIC Update - July 2017

New ASIC cost recovery levy regime now in force

ASIC takes action over misuse of ‘sophisticated investor’ certificates

It will take an army: ASIC’s new guidance on sell-side research misfires


New ASIC cost recovery levy regime now in force

Legislation for ASIC’s new industry funding model became effective on 1 July 2017.   Any entity that is regulated by ASIC will now need to pay a levy for the financial year they were regulated to recover ASIC’s regulatory costs, with the first invoices to be issued in January 2019 (to recover costs for regulatory services for the 2017-18 financial year).   ASIC has now released Report 535 ASIC cost recovery arrangements: 2017-18 which identifies industry sectors and provides a methodology for how the levies will be calculated.

For further details, see


ASIC takes action over misuse of ‘sophisticated investor’ certificates

ASIC has expressed concern that in some instances, accountants have facilitated retail investors acquiring shares offered by a company without adequate, or any, disclosure.  In particular, ASIC is aware that in certain recent fundraisings, some accountants have used trust or company structures that purport to allow investors who are not ‘sophisticated investors’ to receive offers to purchase shares without a prospectus or other regulated disclosure document. 

This has recently occurred in relation to offers of shares by Kwickie International Limited (Kwickie) and, to put the issue beyond doubt, ASIC has made a declaration that Kwickie shares may not be offered to retail investors through a trust structure. 

ASIC has stressed the importance of applying the sophisticated investor test in a way that ensures that retail investors are afforded the safeguards in making appropriate investment decisions that the law explicitly provides for.

ASIC is continuing its investigation into the use of these structures, and is also in discussions with the appropriate accounting professional bodies about this issue. 

See ASIC’s media release dated 7 July 2017.


It will take an army: ASIC’s new guidance on sell-side research misfires

ASIC’s existing guidance on sell-side analyst research has been too principles-based to offer much practical assistance and so there is clearly a need for better guidance.  Unfortunately, Consultation Paper 290 Sell-side research in many respects goes even further than the prescriptive international standards the global houses already comply with, requires a compliance army (which is potentially problematic for many smaller research providers in our market) and focuses the compliance burden on the analyst by making them personally accountable for misuse of MNPI and interference by their colleagues.

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