4.2 The nature of the information that must be disclosed

A PDS for an “offer of interests” in a registered managed investment scheme MUST include all key information about the product that prospective investors who are “retail clients” might reasonably require to be able to make an informed decision whether or not to acquire the product. Key information should, where practicable, be included in the PDS, and not be incorporated by reference.

The statutory provisions dealing with the content of a PDS are set out in sections 1013C [PDS content requirements], 1013D [PDS – main requirements] and 1013E [General obligation to include other information that might influence a decision to acquire].

The provisions of section 1013D require that the following information appear in a PDS:

  1. …………………………., a Product Disclosure Statement must include the following statements, and such of the following information as a person would reasonably require for the purpose of making a decision, as a retail client, whether to acquire the financial product;

    1. a statement setting out the name and contact details of the issuer of the product;
    2. information about any significant benefits to which a holder of the product will or may become entitled, the circumstances in which and times at which those benefits will or may be provided, and the way in which those benefits will or may be provided; and
    3. information about any significant risks associated with holding the product; and
    4. information about:

      1. the cost of the product; and
      2. any amounts that will or may be payable by a holder of the product in respect of the product after its acquisition, and the times at which those amounts will or may be payable; and
      3. if the amounts paid in respect of the financial product and the amounts paid in respect of the other financial products are paid into a common fund – any amounts that will or may be deducted from the fund by way of fees, expenses or charges; and
    5. if the product will or may generate a return to a holder of the product – information about any commission, or other similar payments, that will or may impact on the amount of such a return; and
    6. information about any other significant characteristics or features of the product or of the rights, terms, conditions and obligations attaching to the product; and
    7. information about the dispute resolution system that covers complaints by the holders of the product and about how that system may be accessed; and
    8. general information about any significant taxation implications of financial products of that kind; and
    9. information about any cooling-off regime that applies in respect of acquisitions of the product (whether the regime is provided for by a law or otherwise); and
    10. any other statements or information required by the regulations; and
    11. if the product has an investment component – the extent to which labour standards or environmental, social or ethical considerations are taken into account in the selection, retention or realization of the investment; and
    12. unless in accordance with the regulations, for information to be disclosed in accordance with paragraphs (b), (d) and (e), any amounts are to be stated in dollars.
  2. For the purposes of paragraph (1)(d), an amount will or may be payable in respect of a financial product by the holder of the financial product if:

    1. the holder will or may have to pay an amount in respect of the product; or
    2. an amount will or may be deducted from:

      1. a payment to be made by the holder; or
      2. a payment to be made to the holder; or
      3. an amount held on the holder’s behalf under the financial product; or
    3. an account representing the holder’s interest in the financial product will or may be debited with an amount.

It includes an amount that the holder will or may have to pay, or that will or may be debited, as a fee, expense or charge in relation to a particular transaction in relation to the financial product”.

Section 1015C states:

How a Statement is to be given

  1. A Statement:

    1. must be:

      1. given to a person, or the person’s agent, personally; or
      2. sent to the person, or the person’s agent, at an address (including an electronic address) or fax number nominated by the person or the agent; and
    2. may be printed or be in electronic format.
  2. … to (4)…
  1. The regulations may specify requirements as to:

    1. the manner in which a Statement may be given to a person; and
    2. the presentation, structure and format for a Statement …………”.

REG 7.9.16N – Corporations Reg 2001 states:

The following ASIC Regulatory Guides are essential reading for any person involved in the preparation of a PDS:

  1. RG 97 [Disclosing fees and costs in PDS and periodic statements] issued in March 2017; and
  2. RG 168 [Disclosure: Product Disclosure Statements (and other disclosure obligations)] issued in October 2011.

The following parts of these RGs warrant highlighting here:

Complying with the worked example of annual fees and costs (RG 97.201 – 205)

Disclosing start-up and initial one-off fees and costs (RG 97.214 – 218)

Disclosing fees, charges and returns (RG 168.82 – 86)