ASIC consults on updated guidance to improve disclosure of historical financial information in prospectuses

ASIC has today released a consultation paper proposing to update guidance in Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors (RG 228).

The updated guidance aims to assist companies and their advisers to better understand their disclosure obligations and to improve the quality of historical financial information disclosure in prospectuses. It responds to ASIC’s assessment of the operation of current RG 228 in active capital markets over 2014 and 2015.

The consultation paper sets out:

  • ASIC’s proposals to clarify regulatory settings on the quality and quantity of historical financial information;
  • worked case studies to illustrate the proposed policy settings in practice; and
  • a draft updated version of Section F of RG 228 incorporating the proposals.

The consultation paper seeks specific feedback on the following proposed clarifications of regulatory settings, including:

  • the requirement for audited historical financial information regardless of the issuer’s corporate form prior to listing or historical financial reporting requirements;
  • types of audit opinions that may not be acceptable in a prospectus;
  • appropriate disclosure of asset acquisitions;
  • when financial disclosure is considered ‘current’;
  • disclosure of cash flow statements; and
  • circumstances where historical financial disclosures may not be necessary.

ASIC also notes the release today by ASX of its consultation paper Updating ASX’s admission requirements for listed entities, which is designed to enhance listing standards and which includes proposals on financial information to be included in applications for admission under the assets test.

ASIC Commissioner John Price said, ‘While s710 of the Corporations Act, relating to prospectus content, is flexible, ASIC believes that the inclusion of audited financial information in a prospectus is very important. The proposed changes to RG228 clarify our expectations on historical financial disclosures.

‘The proposals from both ASIC and the ASX seek to promote good listing and disclosure standards’, Mr Price said.

Submissions on Consultation Paper 257 Improving disclosure of historical information in prospectuses: Update to RG 228 (CP 257) are due on 6 July 2016.


The disclosure of financial information about an issuer is an important component of a prospectus and plays a key role in assisting investors to make informed investment decisions.

During active capital markets in 2014 and 2015, ASIC noted continuing issues with the disclosure of historical financial information in prospectuses, highlighting concerns that some prospectuses lodged with ASIC have contained poor and incomplete historical financial disclosure.

To assist issuers and their advisers, we are proposing to modify the guidance in RG 228 to clarify our expectations for the quality and quantity of historical financial information that should be disclosed in prospectuses.

© Australian Securities & Investments Commission. Reproduced with permission.