Australia: ASIC targets infrastructure fundraising: back to the future?

Last Updated: 12 April 2011
Article by Matt Anderson

ASIC has issued draft guidelines for a content checklist for infrastructure fund prospectuses.

Checklists for fundraising documents were abandoned in 1991, because they encouraged prospectuses that "ticked the boxes", rather than addressing the needs of investors.

Now ASIC thinks that checklists are a good idea when fundraising for infrastructure investment. Its reasoning is that:

  • there is about to be an upsurge in infrastructure projects; and
  • as an investment choice, infrastructure is too complex for retail investors to understand under current prospectus and PDS rules.

ASIC wants to issue a set of guidelines that would set out:

  • benchmarks against which infrastructure fundraising documents would report, on an "if not, why not" basis; and
  • matters which infrastructure fundraising documents should address (the "disclosure principles").

Meeting the benchmarks and applying the disclosure principles would not be mandatory. Nor would it guarantee that a fundraising document complied with the statutory disclosure obligations.

Who would be covered?

ASIC hasn't quite decided what would qualify as an "infrastructure entity". It's currently considering two different definitions – listed or unlisted registered managed investment schemes, companies or stapled structure investments that have been offered to retail investors on the basis that:

  • their primary strategy or investment mandate is to invest in infrastructure assets, the right to operate infrastructure assets or other entities which, either directly or indirectly, primarily invest in infrastructure assets (this is ASIC's currently preferred definition); or
  • at least 70% of the value of their non-cash assets may derive from:
    • (a) infrastructure assets or the right to operate infrastructure assets; and/or
    • (b) investments in equity accounted unlisted entities which invest either directly or indirectly in infrastructure assets.

A crucial element, of course, is what constitutes "infrastructure assets". For the purposes of this draft policy, ASIC defines them as:

"the physical plant, property or equipment of roads, railways, ports, airports and other transport facilities, telecommunications facilities, gas or electricity generation and transmission, water supply and sewerage, hospitals, education, public housing and recreational facilities".

This is intended to be an exhaustive list.

What are the benchmarks?

The proposed benchmarks against which prospectuses and PDSs would report (on an "if not, why not" basis) cover a wide range of matters:

  • corporate structure and management
  • remuneration of management
  • classes of units and shares
  • substantial related party transactions
  • cash flow forecast
  • base-case financial model
  • performance and forecast
  • distributions
  • updating the unit price.

For example, in the case of cash flow forecasts, the benchmark would be:

"The infrastructure entity has, for the current financial year, prepared and had approved by its directors:

  • (a) a 12-month cash flow forecast for which the entity has engaged a suitably qualified person or firm to provide, in accordance with auditing standards:
    • (i) negative assurance on the reasonableness of the assumptions used in the forecast; and
    • (ii) positive assurance that the forecast is properly prepared on the basis of the assumptions and on a basis consistent with the accounting policies adopted by the entity; and
  • (b) an internal unaudited cash flow forecast for the remaining life of each significant infrastructure asset."

Note that this does not require the fundraiser to prepare these forecasts: it only has to disclose whether it has done so (and, if not, why not).

"Performance and forecast" could perhaps be more accurately described as "performance against forecast". The fundraiser would have to report against the following benchmark (again, on an "if not, why not" basis):

"For any operating asset developed by the infrastructure entity, or completed immediately before the infrastructure entity's ownership, the actual performance for the first two years of operation equals or exceeds the original disclosed forecasts used to justify the acquisition or development of that asset."

Others are less detailed, but still pack a punch. For example, the corporate governance benchmark requires disclosure of whether the entity's corporate governance practices comply with ASX's corporate governance principles. This might seem like a no-brainer for listed entities. However, ASIC wants it to apply to unlisted entities as well.

Similarly, the benchmark for related party transactions would require unlisted entities to report on whether they comply with ASX Listing Rule 10.1 as if they were listed.

What are the disclosures?

ASX's proposed disclosure regime would see entities do more than just report on an "if not, why not" basis. Instead, they would have to disclose information about:

  • key relationships
  • management fees and performance fees
  • related party transactions
  • financial ratios
  • capital expenditure and debt maturities
  • foreign exchange and hedging
  • base-case financial model (including key assumptions and procedures used in deriving the model, and an analysis of the effect on the entity if key assumptions were materially less favourable than anticipated)
  • valuations (information about valuations and their key assumptions, as well as the entity's policy on valuations – see below)
  • distribution policy
  • withdrawal policy
  • portfolio diversification.

The amount of information to be disclosed could be quite detailed. To take one example – valuations – ASIC proposes disclosure of:

  • (a) details of the entity's valuation policy;

  • (b) if, and how, valuations and supporting documentation are available to investors – or a summary of the valuations (required for significant infrastructure assets only) containing at least the following information:
    • (i) who prepared the valuation (including whether the valuation was prepared by management or externally);
    • (ii) the date of the valuation;
    • (iii) the scope of the valuation and any limitations on the scope;
    • (iv) the purpose of the valuation;
    • (v) the value assessed and key assumptions used to determine value;
    • (vi) the key risks specific to the infrastructure assets being valued;
    • (vii) the valuation methodology;
    • (viii) the period of any forecast and terminal yield;
    • (ix) the discount rate; and
    • (x) the income capital expenditure and capital growth rates over the forecast period; and
  • (c) any circumstances that may result in a conflict of interest arising in the preparation of the valuations.

What's the timeline?

ASIC would like to see the new policy in operation by the end of this year. It would apply to PDSs and prospectuses issued before as well as after that date.

PDSs and prospectuses dated before 1 January 2012 would have to be made compliant with the new policy by the issue of a new or supplementary PDS or prospectus by the first day of the entity's next financial year that begins on or after 1 January 2012.

However, as part of the consultation process (which closes on 6 May) ASIC is seeking comment on this implementation timetable.

Where to from here...

Fundraising is clearly in ASIC's sights at the moment. We understand that it is currently close to issuing another consultation paper on prospectus disclosure. This will include guidance on "clear, concise and effective" fundraising documents as well as general content guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.