Disclosure by unlisted property schemes to retail investors - the impact on your business

The Australian Securities & Investments Commission (ASIC) released its Regulatory Guide 46 (RG 46) on 2 September 2008, for unlisted property schemes (UPS), outlining eight disclosure principles that should apply to upfront and ongoing disclosures to retail investors.

ASIC’s formulation of RG 46 was in response to submissions it received to the UPS consultation paper. RG 46 differs to the UPS consultation paper in three main areas: 1) modification of aspects of benchmarks, disclosure procedures and advertising guidance; 2) clearer guidance for the method of communication of information to investors; and 3) modified implementation timetable.

The eight disclosure principles require disclosure of a scheme’s gearing ratio, interest cover, scheme borrowing, portfolio diversification, valuation policy, related party transactions, distribution practices and withdrawal rights.

This differs from the ‘if not, why not’ approach to disclosure taken by ASIC to unlisted debentures and RG 45 that applies to unlisted mortgage schemes.