Yes. The G100 believes that issuing a class order would be more cost-effective for both the company and ASIC.
 

Yes, as it would provide an opportunity for more flexibility and would reduce costs for those making use of the relief.
 

The proposed relief will assist in the development of an active corporate bond market in Australia. This market will provide benefits by reducing the reliance of corporates on bank debt, reducing name specific concentrations in the asset books of financial institutions, reduce reliance on offshore funding, provide investors with an opportunity to take credit risk (as opposed to equity risk) on specific corporate names, and provide a alternative interest rate risk product for investors.

The risks are similar to those presently taken by investors when dealing in the share market. That is, the investor may not thoroughly investigate or understand the investment, there may be inappropriate marketing of the investment, the investor may lose funds, or there may be inadequate disclosure by the entity issuing the bond.

Yes. The present requirements provide adequate protection for investors.

No. The directors are custodians with responsibilities to both shareholders and providers of debt.

The conditions appear reasonable. However it is unclear what is meant by an ‘unmodified’ audit report as a report would be modified but still be unqualified.
 

As an initial step the G100 recommends that the minimum size requirement should be $100 million of net assets (equity) at the time of the issue for unlisted entities and a market capitalisation of $500 million for listed entities.
 

No. Such conditions would be counter productive, and may also suggest to the investor that ASIC has undertaken credit analysis of general corporate failures and is satisfied that the specified metrics provide sufficient comfort for the product to be an appropriate investment for retail investors.
 

No, not presently. Expansion of the market may be appropriate once Australia has an active corporate bond market.

The G100 supports the relief for ‘vanilla bonds’ as a first step in the process of developing an active corporate bond market in Australia.
 

No. The G100 believes that all entities should be subject to the same requirements resulting from the proposals.
 

Yes, it will be important for the development of a corporate bond market that there is sufficient liquidity in the market for investors to trade regularly. In this regard, a minimum subscription size is particularly important as the market develops. Amendments to the minimum may be appropriate once an active market has been established.
 

No. Such a condition is likely to be an significant impediment to using the proposed relief, considering that most corporates with existing banking facilities will already have entered into commitments in terms of the ranking of creditors. Such commitments cannot easily be changed, and any requirement regarding the ranking of corporate bonds, or the security offered to corporate bond holders, is likely to negative impact the development of a corporate bond market.

We note that there is no proposal to require the corporate bonds to be secured over assets of the company, and believe that this is appropriate.
 

No. This should be a matter which is addressed in the conditions of issue of the bond.
 

This should be a matter which is addressed in the conditions of issue of the bond.
 

This is a matter which should be addressed in the conditions of issue of the bond. As a norm, companies will adjust their financing facilities from time to time, depending on their requirements and on the available finance.

While there may be penalties associated with early redemption of facilities, prima facie there appears to be no reason why companies should not be able to buy back a corporate bond early. In a deep and efficient market, a corporate would use a standard bond prospectus to regularly issue and redeem bonds, depending on cash flow needs.

The proposed disclosures are comprehensive and provide relevant information to potential investors.
 

No. This is a matter that should be at the discretion of directors in the light of the circumstances in each case.
 

The ratios proposed are commonly used and should be understandable to potential investors. However, in circumstances where the specific ratios do not provide a measure of gearing and/or capacity to pay the coupon, the guidance should allow alternative measures to be used, provided such measures are defined, and the reason for their use explained, in the offer document.
 

The G100 believes that compliance with current reporting requirements is all that is necessary when taken in conjunction with continuous disclosure obligations.

Yes. This would provide benefits to issuers.
 

Yes, because it would simplify and streamline the raising of finance in a cost-effective manner.
 

Would providing such relief raise any investor protection concerns?

While many changes may give rise to concerns about investor protection, the various safeguards and the experience in the USA and UK suggest that investor protection is not impaired.

a) lodge a base prospectus which does not relate to any particular offer of corporate bonds and does not contain all the information required to be included in a vanilla bonds prospectus for any particular offer; and

b) (when making a particular offer of quoted corporate bonds) lodge a supplementary prospectus which, together with the base prospectus, contains all the information that is required to be disclosed in a vanilla bonds prospectus for the offer?

Yes, as this would provide greater flexibility for issuers while not diminishing investor protection.
 

a. the base prospectus; and
b. the second-part prospectus?

By its use, the base prospectus can only contain information that does not change during its period of issue. It would need to be withdrawn should there be any change in the information.

Potential information included in the base prospectus would be a description of the company and its business, summarised historical financial data, key risks to the company’s operations, and where additional information on the company can be found.

The second part prospectus would provide an update on any recently released financial information, and information on the specific bond offer.
 

The G100 suggests that the second-part prospectus should comply with the ‘vanilla bonds’ requirements.
 

The G100 would support an extension of this period to say 2 years as a means of overcoming the limitations of the 13 month requirement.
 

The G100 supports relief being provided by way of a class order.
 

The G100 believes that the proposed relief would simplify the process.
 

Yes. The proposed disclosures are comprehensive and enable investors to understand their effects on the entity.
 

The G100 believes that the proposed annual report provides a high degree of relevant and useful information to investors. However, we have concerns about the detail and complexity of the range of disclosure required by accounting standards and their usefulness to shareholders and other investors. The provision of narrative reporting in the form of a director’s discussion and analysis is considered to be an integral part of the reporting process.

Should ASIC form a view that additional information should be incorporated in annual reports, that view would be best provided to the Australian Accounting Standards Board.
 

No.
 

No. The G100 believes that it is necessary to be cautious about continuing to extend the disclosures required in annual report without undertaking a review of the usefulness of existing disclosures. The G100 considers that shareholders and investors should have access to a wide range of information about a company and should not rely solely on the annual report.