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In 2022, ASIC has continued to be focused on forecasts, greenwashing and product design and distribution obligations. ASX released a public consultation paper proposing to make various enhancements to the Listing Rules, the new compulsory Listing Rule compliance course came into effect and ATO guidance on the GST treatment of securities supplied when a company is floated was released. Further details on these and other regulatory updates are set out below.


ASIC gives guidance on forecast earnings ranges and ‘total contract value’

Prospectuses and other disclosure documents may include information that is prospective or forward-looking in nature, including forecast financial information and non-financial targets.

We have discussed in both the 2020 and 2021 editions of The Australian IPO Review ASIC’s proactive approach to the inclusion of forecasts in disclosure documents and its approach to engaging with issuers and their advisers.

In 2022, ASIC raised the issues of including forecasts with earnings ranges in disclosure documents and disclosure documents that include ‘total contract value’ metrics. Both of these disclosures are likely to involve forward-looking statements.

In its June 2022 Corporate Finance Update, ASIC noted that it would not be likely to support the inclusion of forecasts with earnings ranges in disclosure documents on the basis that the inclusion of a range undermines the reasonable basis of the forecast.

In our experience, where there is a material risk or material uncertainty associated with a forecast, instead of utilising earnings ranges, the preferable approach is to utilise shorter-term forecasts (of six to 18 months) and include additional qualitative disclosures which deal with that risk and uncertainty.


ASIC also noted that entities that wish to disclose ‘total contract value metrics’ (including assumptions about future contract extensions) in disclosure documents should take care to ensure that there are sufficient qualitative disclosures to explain the basis of those metrics. In its June 2022 Corporate Finance Update, ASIC noted that it had required an issuer to provide an explanation of the reasonable grounds which underpinned the issuer’s assessment of the likelihood of contract extensions.

We anticipate that, like in previous years, going forward ASIC will pay close attention to forward-looking statements in disclosure documents and will require issuers to have a reasonable basis for any such statement.



In the 2021 edition of The Australian IPO Review, we discussed ASIC’s focus on the inclusion of commitments to achieving “net zero” greenhouse gas emissions in disclosure documents.

In 2022, ASIC made clear that one of its key focuses going forward will be “greenwashing”, which ASIC defines as the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical. ASIC took its first action against an ASX listed entity for alleged greenwashing in October 2022 and continued in the latter part of 2022 to take enforcement action against entities which it alleged to have engaged in greenwashing. The following examples are notable:

  • In October 2022, Tlou Energy Limited paid four infringement notices totalling $53,280 to ASIC for making allegedly false or misleading statements in its ASX announcements. The relevant statements included that the electricity that the company produced was “carbon-neutral”, that its gas-to-power project would be “low emissions”, that it had the approvals and capability to generate certain quantities of solar electricity, and that it was equally concerned with producing “clean energy” as it was with developing its gas-to-power project.
  • In December 2022, Vanguard Investments Australia Ltd paid three infringement notices totalling $39,960 for claiming that one of its index funds had an “investment screen” that excluded companies involved in significant tobacco manufacture and sales. ASIC alleged that the statement was misleading on the ground that the investment screen only excluded manufacturers of tobacco products rather than companies involved in their sale.
  • In a similar case, also in December 2022, Diversa Trustees, a superannuation fund trustee, paid $13,320 in compliance with an ASIC infringement notice. The fund had claimed that it had investment screens in place to avoid companies involved in “polluting and carbon intensive activities”, “financing or support of activities which cause environmental and social harm” and “poor corporate governance”. ASIC alleged that these statements were misleading because the investment screens were more specific and implemented on a more limited basis than the fund’s website had suggested.

ASIC has stated that it is continuing to investigate listed entities in relation to their green credentials claims. We expect that one of ASIC’s key focuses in the coming years when considering disclosure documents will be the extent to which “green” claims have a reasonable basis, are true and are not misleading.


ASIC takes action on product design and distribution obligations

In the 2020 and 2021 editions of The Australian IPO Review, we discussed the introduction and coming into effect of the product design and distribution obligations (DDO).

In 2022, taking enforcement action in relation to DDO became one of ASIC’s key priorities. ASIC placed its first interim stop orders in July 2022 in relation to perceived deficiencies in target market determinations (TMD). In 2022, ASIC placed 21 interim stop orders and commenced its first civil penalty proceeding in relation to a TMD in December 2022.

ASIC has taken action in circumstances where, for example:

  • disclosure documents have contained misleading information (including not adequately explaining how forecasted returns were calculated and using outdated performance numbers);
  • distribution conditions in a TMD were not specific enough to ensure that financial products are distributed to consumers in the target market;
  • DDO conditions were not specific enough to make it likely to reach consumers in the target market;
  • a TMD did not specify any distribution conditions; and
  • a TMD used vague terms to define the target market.

As we have previously noted, ASIC has broad powers under the DDO regime including with respect to information gathering, providing relief through exemptions and modifications, making stop orders and imposing other penalties. We expect that DDO will remain one of ASIC’s key enforcement priorities in 2023 and expect ASIC to pursue litigation more readily for alleged breaches of DDO.




Omnibus ASX Listing Rule Amendment

In April 2022, ASX released a public consultation paper in which it indicated its proposal to make enhancements to the Listing Rules (Omnibus Rule Amendment), including, amongst other things:

  • requiring entities that wish to utilise the placement capacity exemptions set out in rule 7.2:
    • for share/interest purchase plans (SPP), to disclose scale back arrangements in the event the SPP is oversubscribed; and
    • for pro rata issues, to offer any shortfall to eligible existing investors (on a pro rata basis with reference to their holding or their application for over-subscriptions) in the first instance;
  • imposing new disclosure requirements for all material placements (ie non-pro rata offers comprising greater than 10% of an entity’s issued capital or an offer of greater than $50 million) that are consistent with those imposed by ASX on entities seeking to rely on ASX Covid-19 relief to undertake capital raisings involving an initial placement to institutional investors followed by a pro rata or SPP offer to retail investors; and
  • various enhancements to the rules regulating the financial reporting framework for listed entities.

Of importance to IPOs, the Omnibus Rule Amendment included proposals to:

  • add a note to rule 1.1 condition 1 (admission conditions for ASX Listings) and its counterpart in rule 12.5 (ongoing requirements for ASX Listings) which confirms that, for an entity to have a structure appropriate for a listed entity, amongst other things, the terms of its securities must comply with chapter 6 of the rules and it must have governance arrangements suitable for a listed entity;
  • amend rule 1.1 condition 8 (admission condition for ASX Listings) to specify that a security holder is only counted for spread purposes if they are a resident of Australia or of another jurisdiction that is acceptable to ASX;
  • amend rule 1.1 condition 13 (admission conditions for ASX Listings), rule 1.8 condition 9 (admission conditions for ASX Debt Listings), rule 1.11 condition 9 (admission conditions for ASX Foreign Exempt Listings) and rule 12.6 (ongoing requirements for listed entities) to require the person appointed by an entity to be responsible for communication with ASX in relation to Listing Rule matters to be someone acceptable to ASX;
  • amend rule 1.3.2 (the commitments test) to provide that the rule does not apply where the entity has a track record of profitability or revenue acceptable to ASX;
  • amend rule 1.4.7 to extend the date that an entity being listed on the basis of an information memorandum must not undertake a capital raising from three months after the date of issue of its information memorandum to three months after the date of its admission to the official list;
  • amend conditions 3(a) and (b) (admission conditions for ASX Debt Listings) to require the accounts given to ASX by the entity or its guarantor to be audited if the entity is intending to offer or issue retail debt securities;
  • amend rules 1.19 and 2.9 to make clear that ASX’s decision on whether to admit an entity to the official list and to quote its securities is final and that ASX may refuse admission or quotation without giving any reasons to the entity and without being obliged to afford the entity the opportunity to make further submissions on why it should be admitted to the official list or why its securities should be granted quotation; and
  • add new rules 1.19A and 2.9A making it clear that the admission of an entity to the official list and the quotation of its securities should not be interpreted in any way as an endorsement by ASX of the merits of investing in, or the prospects of, the entity and investors should make their own enquiries and exercise due diligence before investing in the entity’s securities.

Consultation on the Omnibus Rule Amendment closed on 27 May 2022, with the amendments set to be released in the third quarter of 2022 to take effect on 1 December 2022. In its Listed@ ASX Compliance Update no. 09/22, ASX notified the market that its consultation response would not be released in 2022 and that the timeframe for its release had not yet been determined.

ASX Listing Rule Compliance Course

In the 2019 edition of The Australian IPO Review, we discussed a range of amendments that ASX made to the ASX Listing Rules which came into effect on 1 December 2019.

One of those changes was a change to Listing Rule 1.1 condition 13 and Listing Rule 12.6 to require persons appointed by a company to communicate with ASX on Listing Rule issues to complete and pass an approved Listing Rule compliance course.

The implementation of this change had been deferred, but the change formally came into effect from 1 July 2022 and the course was made available a week prior.

As part of the changes, from 1 October 2022, any new nominated ASX contact will need to pass the course prior to their appointment as a nominated ASX contact, and the nominated ASX contact for any entities that lodge an application for admission to the official list of ASX will need to have passed the course before the entity is admitted (or readmitted).


ASX released ATO guidance on the GST treatment of securities supplied when a company is floated

In its Listed@ ASX Compliance Update no. 10/22, ASX shared guidance issued by the Australian Tax Office on claiming GST in the context of an IPO.

This guidance noted that the GST treatment of securities supplied in the context of an IPO can be:

  • input taxed if the shares are supplied to Australian residents domestically;
  • GST-free if the shares are issued to non-residents outside the indirect tax zone; or
  • a combination of both if shares are issued to Australian residents and to non-residents outside the indirect tax zone.

The guidance further noted that entities generally cannot claim GST credits for GST paid as part of purchases relating to making input taxed supplies.

There are some exceptions. If an entity does not exceed the financial acquisitions threshold, it may be able to claim a GST credit for the GST paid on purchases relating to input taxed supplies. However, if the entity exceeds the financial acquisitions threshold, the entity cannot claim GST credits on purchases made to make financial supplies, but the entity may still be able to claim a reduced input tax credit on those purchases if they are reduced credit acquisitions.

Director Identification Numbers

On 1 November 2021, a regime was introduced into Parts 8B.8 and 9.1A of the Corporations Act 2001 (Cth) which required directors (or alternate directors acting in the capacity of a director) to apply for a Director Identification Number (DIN).

All directors appointed after 5 April 2022 must have a DIN before being appointed. Directors must apply personally and no person can apply on a director’s behalf.

Foreign resident directors who do not have an Australian visa must complete an application form which must be signed in wet ink and posted to Australian Business Registry Services. In our anecdotal experience, this is a consideration which should be factored into any timetable which involves the appointment of foreign directors.




Key contacts

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Philip Hart

Partner, Sydney

Philip Hart
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Cecilia Mehl

Executive Counsel, Melbourne

Cecilia Mehl

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