THREE YEARS after 60,000 investors lost more than $1 billion in the high-profile collapse of a string of tax-driven agribusiness schemes, the corporate regulator has issued a new set of disclosure guidelines it hopes will prevent a recurrence of the disaster.
Heavily-geared agribusiness managed investment schemes offering investors upfront tax deductions, promoted by companies including Timbercorp, Great Southern and Willmott Forests attracted more than $5 billion in the five years to 2007-08 before collapsing in the wake of the financial crisis.
The collapses led to a parliamentary inquiry, chaired by federal Labor MP Bernie Ripoll, which reported in September 2009 and recommended changes to the upfront tax deductibility of non-forestry managed investment schemes.
It also proposed amendments to the corporations law to prevent conflicts of interest when schemes went broke, and called on the corporate watchdog to improve the disclosure requirements for scheme promoters and their advisers.
Yesterday, the Australian Securities and Investments Commission released a new regulatory guide outlining new benchmarks and principles with which promoters of new agribusiness managed investment schemes would have to comply in their product disclosure statements, on an ''if not, why not'' basis. This would be similar to separate guidelines on infrastructure, contracts for difference and debentures.
The benchmarks include better disclosure of fee structures, related party dealings and the
independence and qualifications of third-party experts.
The principles include disclosure of: any investor financing arrangements; the promoters' track record in operating agribusiness schemes, a promoter's own financial position and arrangements for access to land, licences and water. There are also standards for advertising of agribusiness managed investment scheme products. The requirements apply to any agribusiness scheme product offered after August this year.
Zenith Investment Partners senior analyst Dugald Higgins said yesterday the new ASIC guide was a positive step but cautioned ''none of these proposals are ever going to prevent people losing money''.
''As with all these investor's guides, we are always a little bit wary that mum and dad investors treat them in a way they're not meant to be treated,'' Mr Higgins said. ''Investors will still need to understand that the fact that managers report on benchmarks isn't going to be the be-all and end-all.''
Inflows to the managed investment scheme sector have collapsed by moer than 95 per cent from 2008-09, and confidence is yet to return to the sector as investors continue to stick with low-risk investments such as cash and bonds. Mr Higgins said many financial planners were unable to recommend agribusiness schemes because professional indemnity insurers remained wary of the sector.
Mr Ripoll, chairman of Parliament's corporations and financial services committee, which conducted the original inquiry, denied ASIC's guide had come too late. ''There's no such thing as late. At any point in time, if a regulatory guide can assist people, then I think that's a positive.''
Mr Ripoll also defended the tax deductibility of agribusiness schemes because of the lag in returns.
with Ruth Williams
