The ability to see around corners – ASIC Report 823

Introduction

Today’s blog post focusses on some of the key governance and commercial takeouts from the recently released Australian Securities and Investments Commission (‘ASIC’) Report 823 ‘Advancing Australia’s evolving capital markets: Discussion paper response report’ (‘REP 823’).

REP 823 explores the changing dynamics between Australian public and private markets, highlighting declining Australian Securities Exchange (‘ASX’) public listings, the growth in investment capital allocated to private markets and the growing significance of superannuation funds. The report also sets out key issues ASIC has identified within current markets and to the participants in these markets, and provides further detail on ASIC’s plans for the next 12 to 18 months to address these matters.

The ability ‘to see around corners’

The best businesses and their leaders have an innate skill set ‘to see around corners’. What that means is that these leaders have built skills of anticipating what will happen next, by ‘connecting the dots’ that others miss.

There is a famous sports quote attributed to both Walter and Wayne Gretzky and that is:

“to skate to where the puck is going to be, not where it has been”.

The quote is used as a metaphor for being forward-thinking rather than reactive, in sports and business alike - to use one’s skills to anticipate future events to create competitive advantage and to also manage risk.

In corporate governance, it pays for a board to be aware of evolving trends and ‘seeing around corners’. Being prepared for change in advance of the actual change occurring can lead to improved commercial and risk management outcomes.

For those businesses that are exposed to ASIC’s regulatory landscape, the trend of increasing regulation is continuing, including for wholesale investment managers. More sophisticated investors want to know and understand that their investment managers are not only delivering the financial outcomes being forecast but to also have institutional grade governance to manage emerging risks.

As business cycles turn, and the regulatory heat gets turned up, getting ‘ahead of the curve’ is not only good practice, it is essential for coming out of the cycle in even better shape than before – to thrive, not just survive in the next cycle.

REP 823 Private Market implications

Key implications for private market participants and their company boards include:

1. be prepared for ASIC to focus more on enhanced data collection;

2. review compliance frameworks now to ensure they are fit for purpose, particularly around conflicts of interest, valuation policies and procedures and disclosure relating to offering documents and material continuous disclosure; and

3. be aware of ASIC's proposal to apply certain additional ‘retail like’ regulation (including regulation that currently applies only to registered managed investment schemes) to wholesale funds.

The ASIC Top 10 for Private Credit

In one of my recent blog posts titled ‘Being efficient, honest & fair - Private Credit under the ASIC microscope’ dated 17 October, I referred to ASIC’s concerns contained in their initial high-level review of the private credit market in Australia, ‘Private credit in Australia’, REP 814 (‘REP 814’) on 9 September 2025.

Based on industry feedback relating to REP 814, in REP 823, ASIC has developed a set of 10 key principles to assist private credit participants in complying with the law and tackling private credit compliance issues:

1. act as stewards of investor capital;

2. maintain adequate resources and expertise;

3. provide transparent information to investors;

4. ensure product design and distribution is transparent and targeted appropriately;

5. ensure fair and transparent fees;

6. manage conflicts of interest effectively;

7. implement robust governance structures;

8. conduct fair and timely valuations;

9. manage liquidity risk appropriately; and

10. apply disciplined credit risk management.

As private credit promoters have increased the targeting of retail and less sophisticated wholesale investors (particularly in relation to private credit funds invested in real estate), ASIC hopes that the top 10 principles will assist private credit participants to better comply with the law and to tackle emerging compliance issues as the private credit cycle inevitably turns.

Note: Experienced AFSL managers would be aware that the above ten principles could also be closely matched to the key obligations contained in s912A(1) of the Corporations Act (2001) Cth (‘Act’). These obligations under the Act are not optional - they are clearly prescribed.

Wholesale Investment Managers preparing for ‘retail-like’ rules?   

ASIC proposes extending certain requirements, such as statutory duties and notification of significant events (for example, redemption suspensions, material adverse changes), that currently apply to responsible entities of registered retail schemes, to managers of unregistered wholesale managed investment schemes. REP 823 recommends requiring wholesale fund operators to provide ongoing data and independent audited financial reports to ASIC, similar to the requirements for retail funds.  

Conclusion

Given some of the recent issues in Australian financial services relating to the AU$1.2 billion losses in retail superannuation linked to the Shield Master Fund, the recent AU$1.8 billion bankruptcy of a high profile hotel investor (backed mainly by private credit) and questionable NTA calculations of illiquid property holdings, one might assume that ASIC will increase regulation in the AFSL and regulated managed investment scheme space. ASIC is literally ‘telegraphing’ more significant compliance regulations are on their way.

If you are a private company board or a company holding an AFSL and would like to discuss how I can assist your company with enhancing your governance so that you can better manage your compliance risks and protect your investors, please contact me for an obligation free discussion. I can assist your company with:

• Responsible manager;

• Compliance committee;

• Company director;

• Compliance review; and

• Governance committee services.

I’d be honoured to assist your company meet its ongoing compliance obligations relating to your AFSL and to give your customers and investors comfort that you ‘can see around corners’, anticipate future trends and are managing your business with institutional grade corporate governance.

Disclaimer

This content of this blog post is not legal advice. The information provided is opinion and for general purposes only and is not a substitute for personalised legal counsel.

 https://www.andrewsmcneil.com/