RG 228 – Historical financial information and lodging your prospectus

20 January 2017

Sherif Andrawes , Global Head of Natural Resources
Partner, Corporate Finance

It’s all in the timing!

Based on current experience and discussions with lawyers and other advisors around town, 2017 is shaping up to see an increase in IPO activity. In light of this, understanding the financial requirements of ASIC’s revised Regulatory Guide 228 (Prospectuses: Effective disclosure for retail investors) issued in November 2016, is all the more important.

Including historical financial information

Whilst there are many interesting new aspects to RG228, one of the basic rules is that a company should include either three years historical financial information (income statement and cash flow statement) or two and a half years depending on which half of the year you lodge your prospectus. 

Broadly, if you are lodging your prospectus between now and 30 September 2017 this means that you would expect to include historical financial information for the years ended 30 June 2015, 30 June 2016 and for the half year ended 31 December 2016.  However, because of the requirement in the revised RG 228.89 to include prior period comparatives you will actually also need to include financial information for the half year ended 31 December 2015.

Timing the lodgement of your prospectus

This can cause an issue even for those companies who have been planning their IPO for some time and have completed audits annually. Unless you have a crystal ball, it is unlikely that you will have known a few years in advance whether your future IPO will be in the first or second half of the calendar year. There would have been no requirement to have your half yearly accounts reviewed and so it is very unlikely that this would have been performed in advance. This means that it is likely that you will need to arrange a retrospective half year review on the comparative half year figures if your prospectus is dated in the ‘wrong’ half of the year.

In short, if you are looking to lodge a prospectus between now and 30 September 2017 and plan to include 31 December 2016 financial information, start planning for a retrospective review of the 31 December 2015 half year now so that your prospectus timetable is not delayed.

Remember in practice the rule is actually - three years or two years and two half years!