The Australian Private Equity and Venture Capital Association Limited (AVCAL) is lobbying the federal government to include a “materiality threshold” in new legislation governing superannuation fund disclosures about portfolio holdings.
AVCAL has suggested that any individual asset that is less than 0.1 percent of the net asset value of the portfolio held by a superfund need not be disclosed.
The addition of such a threshold will “improve the usefulness of the disclosures and reduce the sheer volume of immaterial disclosures -which may not necessarily be commercially sensitive, just immaterial,” explained AVCAL head of policy and research, Kar Mei Tang.
Under the draft proposal, there is no “materiality threshold” which means that superfunds would likely have to disclose hundreds, “if not thousands, of investments that are extremely small exposures individually”, Tang said.
Under the current draft, superfunds will not have to disclose information on up to five per cent of the assets attributable to each of their investment options. This provides a superfund with the flexibility to select a limited number of investments, including private equity, which it considers to be commercially sensitive, to exclude from disclosure.
“The incorporation of this flexibility is a welcome development from AVCAL's perspective,” said Tang.
The earlier version of the draft legislation would have impacted any fund, including most private equity and some venture capital funds in Australia and any international funds with Australian Prudential Regulation Authority-regulated superfunds among their investors, said Tang.
In its submission, AVCAL also suggested that the definition of value be disclosed and that the International Private Equity Valuation (IPEV) Guidelines, to which members must comply, be adopted.
It also recommended a coordinated initiative by Treasury, ASIC, APRA, as well as the third-party administrators used by superfunds to collect regulatory data from investment managers. “This would better align and streamline the format and reporting of the required data,” it states.
AVCAL was responding to the Australian government's Exposure Draft Legislation Superannuation Legislation Amendment (Transparency Measures) Bill 2015: Portfolio holdings disclosure and Exposure Draft Regulation Superannuation Legislation Amendment (Transparency Measures) Regulation 2015.
The draft was released for comment by the government on 10 December 2015 and the deadline for submissions was 20 January.
In May 2014, the government announced that there would be a 12-month deferral period to allow for further consultation on the design of new rules that would have required commercially sensitive information to be published by superannuation funds.
New legislation will become effective from 1 July 2016 with the first reporting period being the six months from 1 July 2016 to December 2016.