Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Power) Bill 2018
The Corporations Committee of the Business Law Section of the Law Council of Australia welcomes the opportunity to comment on the second Exposure Draft Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Power) Bill 2018 (Exposure Draft) and the accompanying Explanatory Materials (Draft EM), which were released for comment on 20 July 2018.
Preliminary comments – significant improvements in the Exposure Draft
The Committee acknowledges that it is clear from the Exposure Draft that submissions from the initial consultation process were given serious consideration, and the draft reflects many significant improvements. This is an important acknowledgement, as the changes made have addressed some of the key concerns regarding the earlier draft, and we consider that they will improve the clarity of the legislation and go some way to improving the practicality of the new regime. In particular, the:
- improved clarity regarding the exclusion of secondary trading on securities exchanges;
- acknowledgement that ordinary shares of both Australian and foreign-registered entities should be excluded (although there are some practical anomalies regarding depositary interests necessary to trade foreign shares);
- attempt to allow issuers and distributors a degree of flexibility in determining the appropriate way to respond to the regime, for different types of products and in different contexts;
- clarification that question to determine target market eligibility do not constitute personal advice; Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Power) Bill 2018 Page 2
- clarification as to whether a target market determination should be made available as part of a disclosure document;
- move from a concept of a product meeting client objectives to being consistent with those objectives;
- acknowledgement that issuance outside a target market determination will not necessarily suggest a breach of the obligations on issuers and distributor;
- concept of retail product distribution conduct being narrower than “dealing”; and
- extension of time for implementation for new products (although we note that there may need to be some flexibility preserved to extend this period if necessary), are important and welcome improvements.
You can read the full submission below.