Debenture advertising: ASIC Regulatory Guide 156

ASIC has released  Regulatory Guide 156: Debenture advertising (pdf).

ASIC will expect advertising by debenture issuers to comply with the guide from late January 2008 onwards.

The Guide sets out the following principles-based standards in relation to the advertising of debentures for issuers of debentures:

1. All advertisements for debentures offered to
retail investors should include a prominent statement to the effect
that investors risk losing some or all of their principal investment.

2. Advertisements for debentures should only quote
an interest rate if it is accompanied by prominent disclosure of either
the current credit rating for the debenture and what that means or
where to find this information or, where the debenture does not have a
rating, what this means.

3. Advertisements should state that the debenture is
not a bank deposit. They should also avoid the use of terms such as
‘secure’, ‘secured’ and ‘guaranteed’ and avoid the term ‘no fees’, as
these statements may convey a misleading impression as to the risk
profile of the debenture.

4. Advertisements for debentures should not state or imply that the investment is suitable for a particular class of investor.

5. Statements in advertisements for debentures should be consistent with the corresponding disclosures in the prospectus.

6. Statements made in response to inquiries are
subject to the same regulation regarding misleading and deceptive
conduct as the advertisements.

The guide also makes it clear that ASIC expects
publishers to have systems and controls to detect and refuse
advertisements for debentures that do not comply with these advertising

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