The Corporations Amendment Regulations 2010 (No. 5) commenced on 22 June 2010.
The regulations prescribe product disclosure statements (PDSs) not exceeding eight pages in length for superannuation funds and simple managed investment schemes. Margin loan PDSs are required to be no longer than four pages.
The regulations prescribe the section headings and contents of the shorter PDSs. Additional information can also be included provided the prescribed length is not exceeded. The prescribed content covers key information such as product features and benefits, risks, taxation, investment options and fees and costs. For margin loans, certain additional information specific to these products is prescribed, including an explanation of what a margin call is and how investors can manage the risk and consequences of receiving a margin call.
The regulations also provide for other material to be located outside the PDS document itself, with a reference included in the PDS telling readers where they can find this information. The material referred to in this way is deemed to be part of the PDS and the full range of liability and enforcement provisions of the law apply to it.
The provisions for superannuation and managed investment scheme PDSs provide for a transitional period of 24 months for implementation. After the initial 12 months, businesses will have to comply with the new regime if they amend an existing PDS or offer new products requiring a new PDS. After 24 months, all PDSs will need to comply with the new regime.
The margin loan PDS provisions apply from 1 January 2011, coinciding with the date when margin loans come under Commonwealth regulation.