Australia: Introduction of the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 (Cth)

Corporate Update (Australia)
Last Updated: 13 April 2013
Article by Jim Holding, Lyndon Masters and Alexander Samson

On 20 March 2013, the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 (Cth) (the Bill) was introduced to the House of Representatives.

Primarily the aim of the Bill is to reduce regulation around the issue of and to streamline the disclosure requirements for the issue of simple corporate bonds to retail investors to enable the Australian domestic market for corporate bonds to develop.

The Reserve Bank of Australia estimates the current value of the Australian non-government bond market at around $800 billion. However, approximately 69% of value of those outstanding bonds, or $530 billion, is held by foreign investors. Institutional investors hold approximately 31%. Less than 1% of the value of the corporate bond market is held by Australian retail investors. The Reserve Bank of Australia attributes this figure to the disclosure requirements which currently exist for the offering of securities in Australia. Due to the onerous disclosure obligations, many corporations consider it to be more cost effective to raise debt funding from institutional investors or overseas. Corporate bonds issued in respect of Australian companies are often issued in overseas markets, as these markets are considered by many to provide a more competitive price when companies are looking to raise large amounts of capital. Overseas markets are also generally considered to be more liquid.

Two-part simple corporate bonds prospectus

In order to develop the retail corporate bond market in Australia, it is intended that the disclosure requirements for the issue of simple corporate bonds in Australia to retail investors will be streamlined to encourage companies to raise capital domestically rather than in overseas markets.

In order for bonds to be simple corporate bonds (and therefore subject to the two-part simple prospectus regime), certain conditions must be satisfied:

  • They must be debentures
  • They must be quoted on a prescribed financial market
  • They must be denominated in Australian dollars
  • They must be for a fixed term of no greater than 10 years
  • The principal must be repaid at the end of the fixed term
  • The interest must be fixed (which cannot be decreased) or floating. Where the interest rate is floating, there must be a reference rate and fixed margin (which cannot be decreased)
  • Interest must be paid no later than the end of the term, and cannot be deferred or capitalised by the issuing company
  • The price of each bond must not exceed $1,000 and must be the same for each investor
  • The bonds must not be redeemable prior to the end of the term, except at the option of the bondholder, acceptance by a bondholder of an offer to buy back the bond, a change in law which impacts tax liabilities, where there is a change in control of the company which issued the bonds, or where fewer than 10% of the bonds remain on issue
  • The bonds must not be subordinated to the debts of unsecured creditors
  • The bonds must not be convertible into another form of security
  • The bonds must be guaranteed by a parent company if the issuing company is a wholly owned subsidiary
  • The issuing company or its parent guarantor must have continuously quoted securities which have not been suspended for more than five days during the previously 12 months from the date the bonds are offered
  • An auditor's report in respect of the issuing company's most recent financial statements must not be qualified
  • The first offer by the issuing company has minimum subscription amount of $50 million
  • The Australian Securities and Investments Commission (ASIC) hasn't previously determined that the issuing company cannot issue simple corporate bonds

In order to simplify the disclosure requirements for the issue of simple corporate bonds, the Bill will introduce a two-part prospectus regime. Initially, a company wishing to issue bonds into the Australian market must lodge with ASIC a base prospectus, which contains general information about the issuing company. The base prospectus must state that bonds will not be issued unless the minimum subscription amount is raised. The base prospectus will need to be available on the company's website and will have effect for three years.

During that three-year period, each time the company wishes to make an offer of simple corporate bonds to retail investors, a shorter offer-specific prospectus will need to be lodged with ASIC, which may modify or supplement the information contained in the base prospectus. This two-staged process should be of benefit to retail investors who are not interested in reading a lengthy prospectus. An issue under an offer-specific prospectus must have an expiry date not greater than 13 months from the date the offer-specific prospectus was lodged with ASIC.

Together the two documents will form one prospectus and will be considered issued on the date the offer-specific prospectus is lodged with ASIC.

It is currently unclear precisely what information must be contained in the two-part prospectus as the amending provisions in the Bill simply refer to the as yet unknown requirements specified in the regulations. However, both the base prospectus and the offer-specific prospectus may incorporate information by reference to documents which have been previously lodged with ASIC.

During the initial two years after the Bill comes into effect, issuing companies may elect to use the existing disclosure regime or the new two-part disclosure regime to issue corporate bonds in Australia. Following this transition period, the new proposed rules would apply.

Relief from director liability for simple corporate bonds

The Bill also seeks to develop the retail corporate bond market in Australia by providing relief to directors from liability arising from deficient prospectuses for the issue of simple corporate bonds.

Currently under the Corporations Act 2001 (Cth) (Corporations Act), each director of a company is automatically personally liable for a prospectus which contains misleading or deceptive statements or which lacks required information. The Bill seeks to relieve directors of that automatic personal liability in relation to defective prospectuses for simple corporate bonds, where the director can demonstrate that they were not involved in the contravention (through the due diligence defences).

However, the Bill requires that all of the directors of an issuing company (of simple corporate bonds) must consent to the lodgment of the prospectus. Therefore criminal liability may be imposed on all directors under Part 9.4 of the Corporations Act, where the prospectus is false or misleading. Although the Bill introduces due diligence defences for criminal liability arising under Part 9.4 of the Corporations Act, it is unclear whether those defences in fact add anything to the 'reasonableness' requirement which already exists as an element of the criminal offences and as such the Bill may not provide the level of relief from liability which was intended.


The question remains as to whether the steps set out in the Bill will be sufficient to ignite the market in Australian corporate bonds. In our view, whilst the Bill is certainly a step in the right direction, broader questions remain as to whether the gap between issuer and investor expectation and the currently low demand in Australia for bonds can be overcome.

We will provide updates on this Bill as we continue to monitor and track its progress.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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.