In ASIC’s recent Report 589 ASIC regulation of corporate finance: January to June 2018 (REP 589) ASIC considered the effect of the Financial Services Royal Commission on InitiaI Public Offers (IPOs). It said that the Royal Commission into misconduct in the banking, superannuation and financial services industry should be carefully considered for financial service businesses seeking to list.
It reported that during the period from January to June 2018:
• in one live IPO, ASIC closely examined and queried the adequacy of disclosure about the risks associated with a wealth management company’s vertical integration model;
• another company involved with the provision of credit decided to withdraw its IPO at the last minute after discussions with ASIC about its loan agreements.
ASIC said that if a financial services company raises funds through an IPO over the coming period, it considers that investors should be given candid information about how the business may be affected by the issues being raised in the Royal Commission.
Depending on the business model, this may include:
• relevant historical and current interaction with regulators and possible outcomes;
• the specific regulatory risks that the business may encounter, including risks relating to the treatment of consumers.
ASIC Deputy Chair, Peter Kell, discussed issues relating to the Royal Commission in this speech.
