Australia defers full disclosure requirements

The Australian government has deferred the implementation of new transparency laws for a period of 12 months, which will be used for further consultation, according to the Australian Private Equity and Venture Capital Association (AVCAL).

New rules, which would require superannuation funds to disclose every investment held, along with the relative market valuation of that investment every six months, were set to come into effect on 1 July 2014.

However, following a number of recent submissions by AVCAL to Australia’s Department of the Treasury and the government, arguing that the new rules would force private equity and venture capital funds to provide market sensitive valuation information about assets that could jeopardize potential sale negotiations, the government agreed to allow for further consultation on the matter.

The proposed regulations had strong objections from “a number of superannuation funds” who are opposed to disclosing portfolio holdings on a “full look-through basis”, AVCAL said earlier.

Under the reforms, the country’s superannuation funds, which essentially make up Australia’s LP base, would be required to publicly disclose information such as fees and costs payable by the fund and asset allocation percentages. In addition, every six months the supers will need to identify all of their direct or indirectly held assets and each asset’s current value on their website.

The requirements are for all superfund investments globally, including existing commitments.

The industry body pointed out that such obligations would ultimately be to the disadvantage of superannuation fund members, who would in the future be excluded from being able to invest in private equity funds as a result of the practical application of these rules.

“For private equity and venture capital funds, these rules are the equivalent of asking the vendor of a property to tell everyone what their reserve price is before the start of an auction,” Yasser El-Ansary, chief executive of AVCAL, explained.

“There’s a reason why vendors don’t do that – it doesn’t help them to realize the best market price for their asset.”

AVCAL pledged to continue its participation in the next phase of the consultation process “to ensure that Australia’s new portfolio holdings disclosure regime is designed to be comparable with equivalent regimes in other developed markets”.