Treasury releases simple corporate bond regulations

Treasury has released draft regulations designed to streamline the disclosure regime for corporate bond issuers, as part of the Government's plan to encourage the development of a stronger corporate bond market.

Under current arrangements an issuer must prepare a base prospectus containing general information about the issuer and the bonds, as well as an offer-specific prospectus with information specific to the transaction.

The two documents together form an offer of corporate bonds.

The new regulation is intended to remove the administrative burden on issuers by no longer requiring them to reproduce a base prospectus for each offer.

A single base prospectus must be created and maintained as a separate document from any offer-specific prospectus. It will have a life of three years.

The draft regulation also contains more detail about the information that must be included in the two types of prospectuses.

The offer-specific prospectus must provide offer details, key dates, the terms of the offer, guarantees in relation to the bonds, events that would constitute default, redemption details, fees, and information about any selling restrictions.

Treasury has called for submissions on the draft and has set a deadline of November 14.