ASIC has issued its latest report into prospectuses, mergers and acquisitions and takeovers (click here for a copy of the report).
In the report, ASIC raised concerns on over 33% of prospectuses lodged with it during the second half of 2014, including issuing 27 interim stop orders. Its concerns included:
- prospectuses being prepared in a formulaic way and not tailored to the relevant business;
- due diligence practices varying widely, with the result that in some instances ASIC questioned the reliability of the information provided in a prospectus;
- financial information (including pro-forma financial information) not being sufficiently complete or adequately reviewed by a third party such as an auditor;
- poor quality information about companies operating in an emerging market;
- in respect of a number of backdoor listings:
- insufficient financial disclosure, including a lack of operating history, lack of audited financial information and disclosure of information presented other than in accordance with accounting standards (non-IFRS financial information);
- insufficient disclosure of a company’s business model and use of proceeds;
- disclosure of directors’ history not consistent with our policy in RG 228; and
- risk disclosure not adequate or appropriately tailored to a company’s circumstances.
For further information about preparing prospectuses for lodgement with ASIC, please contact Chris Mee on +61 7 3324 2960 or 0408 014 274.