Tuesday 5 September 2006 LAWFUEL – Legal News Network – The Australian Securities and Investments Commission (ASIC) has announced plans to develop a policy which will allow buy-backs of interests in listed registered schemes in certain circumstances. ASIC’s policy will take into account industry concerns that existing regulation of buy-back offers for managed investment schemes makes it difficult for listed schemes to use the capital management techniques available to listed companies.
Currently, on-market scheme buy-backs are difficult to implement due to the application of the withdrawal procedures under Part 5C.6 of the Corporations Act to schemes that have non-liquid assets. ASIC recently approved relief from various requirements of the Act to an ASX-listed entity to facilitate a proposed on-market scheme buy-back. This relief was granted subject to a number of conditions, including: • that the number of interests to be acquired under the buy-back be limited to no greater than 10 per cent of the smallest number, at any time during the last 12 months, of interests on issue,
• buy-back price ceilings ensure that members who do not participate in the buy-back do not have the value of their holdings unfairly diluted as a result of the buy-back. These ceilings were calculated both by reference to net asset backing of the interests and by reference to the average market price of the interests, and
• that adequate notice of the intended buy-back be provided to allow equal opportunity to participate in the buy-back.
‘In developing its final policy in this area, ASIC will seek to balance two main factors – maintaining the special protections the law provides for holders of interest in managed investment schemes, and the need for funds competing in an increasingly global market to have available some of the capital management techniques available to listed companies’, said ASIC’s Executive Director of Regulation, Mr Malcolm Rodgers. ‘Our preliminary thinking is that the availability of a reliable pricing mechanism through trading on ASX provides a way of balancing the interests of both exiting and remaining fund members.’
In the interim, ASIC will consider any applications for relief in relation to on-market buy-backs by listed schemes on a case-by-case basis. Applications can be made by emailing a copy of your application and any attachments to [email protected] Further information is available at http://www.asic.gov.au/asic/asic.nsf For further information contact: John Price Director, Regulation Telephone: 03 9280 3639 Mobile: 0403 138 537 Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310