Funds Update - 28 February 2025

In this Funds Update for 28 February 2025:

1. ASIC releases private markets and private capital report
2. ASIC consults on additional relief under the reportable situations regime
3. ASIC re-issues INFO 5 re suppression of residential addresses for company directors and secretaries

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ASIC releases private markets and private capital report

On 26 February 2025, ASIC released its much anticipated report in relation to private markets and private capital – a discussion paper titled Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (Paper).

The Paper identifies that ASIC is concerned about the future of Australia’s public equity markets and that ASIC is increasing its focus on private capital, with a view to being well informed and to test whether investment offers comply with existing laws.

8 key questions form the foundation of the Paper:

1. Are the changes in Australia’s public and private markets due to structural or cyclical shifts (or both)?
2. What impacts will the continual growth of superannuation funds have on Australia’s capital markets?
3. Do regulators have access to the right data to understand the impact of changes in our capital markets on the economy?
4. What data do we have to understand how private capital – both debt and equity – will respond in a system stress scenario?
5. What does market integrity look like in practice as more capital raising occurs outside public markets?
6. Is the shift to private markets creating issues for retail investors such as reduced access to investment opportunities and greater exposure to risk, with fewer protections?
7. Does there need to be greater harmonisation in the regulation of public and private companies?
8. How can Australia’s capital markets remain attractive and meet future economic needs?

As part of ASIC’s mandate to improve the financial system and promote confident participation in it, ASIC intends to continue to fulfil its strategic priority of enhancing consistency and transparency across markets and products, including through:

• engagement on market developments and regulatory settings, to ensure ASIC’s regulatory approach continues to be fit for purpose;
• promoting market integrity, by expanding ASIC’s periodic measurement of suspicious trading in public equity markets to include public debt markets and private market transactions; and
• testing compliance with financial services laws, with an increased focus on private equity and private credit conduct risks.

Appendix 1 of the Paper poses 15 discussion questions for participants in Australia’s capital markets, their advisers and other interested persons. ASIC is seeking feedback before 28 April 2025 on these questions including (at question 13) “whether current financial services laws provide sufficient protections for retail investors investing in private assets (for example, general licensee obligations, design and distribution obligations, disclosure obligations, prohibitions against misleading or deceptive conduct, and superannuation trustee obligations)”.

ASIC has stated that it intends to release an update later in 2025 which will outline the key feedback received and how such feedback has informed ASIC’s priorities and work program.

The ASIC media release on the Paper can be found here.

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ASIC consults on additional relief under the reportable situations regime

On 18 February 2025, ASIC invited feedback on a proposal to provide additional relief under the reportable situations regime. ASIC is proposing relief from reporting certain breaches of the misleading and deceptive conduct (MDC) provisions and certain contraventions of civil penalty provisions (CPPs).

Specifically, ASIC is proposing to provide relief from reporting breaches of the MDC provisions and CPPs when:

1. the breach has been rectified within 30 days from when it first occurred (this includes paying any necessary remediation);
2. the number of impacted consumers does not exceed five;
3. the total financial loss or damage to all impacted consumers resulting from the breach does not exceed $500 (including where the loss has been remediated); and
4. the breach is not a contravention of the client money reporting rules and clearing and settlement rules.

Feedback is due by 5pm AEDST on 11 March 2025.

The ASIC media release can be found here.

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ASIC re-issues INFO 5 re suppression of residential addresses for company directors and secretaries

On 17 February 2025, ASIC re-issued Information Sheet 5 (INFO 5) which explains how company directors or secretaries can apply to have their residential address suppressed, that is, hidden from public view.

A director or secretary can apply to ASIC to have their residential address suppressed from public view if they believe that their address appearing on the publicly available company register could put their safety, or their family’s safety, at risk. In this instance, an alternative address will need to be supplied, which will be displayed on the public register instead the residential address.

The re-issue of INFO 5 seeks to simplify the current suppression process, including:

• adding links to the AEC website for further guidance on silent enrolment;
• making lodgement requirements clearer; and
• defining how to manage and cancel an existing suppression.

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