ASIC has released draft guidelines for issuers and advisers on the preparation of prospectuses. 

The draft policy statement, Better prospectus disclosure, includes advice about the Corporations Act requirement that prospectuses be worded and presented in a clear, concise and effective manner. 

 ASIC Acting Chairman Mr Cooper said issuers should explain the practical implications of what is being offered, rather than presenting a mass of
legal and financial details.

 Under the draft guidance, ASIC recommends issuers:

• make prospectuses as short as possible;
• leave out extraneous material;
• highlight critical information;
• organise information in a logical way – e.g. cascade the story from the simple to the more detailed;
• provide clear navigation around the document;
• consider incorporating technical and detailed financial information by reference;
• use plain and direct language; and
• use a range of communication tools, including simple graphical illustrations.

The policy statement also provides guidance on some specific prospectus content issues that have arisen in the past such as:

• risk disclosure;
• high-yield debentures;
• use of proceeds of the fundraising; and
• share allocation policy.

Comments on the draft policy statement are due by Friday, 7April 2006.