ASIC Is Watching: Compliance as a Competitive Advantage

PrimaryMarkets Male

ASIC is Watching, Compliance as a Competitive Advantage

PrimaryMarkets Male

ASIC is paying closer attention to Australia’s rapidly growing private capital sector. For companies raising capital, fund managers and private market platforms, that means compliance can no longer be treated as a final box to tick before an opportunity reaches investors. In this episode, we explore why accurate marketing, credible valuations, strong governance and transparent reporting are becoming essential to attracting wholesale and sophisticated investors. We also examine how regulatory discipline can strengthen investor confidence, support more efficient capital raising and help create sustainable liquidity in unlisted shares. ASIC may be watching—but so are investors. And in today’s private markets, compliance is increasingly becoming a genuine competitive advantage.

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Australia’s private capital sector is entering a new stage of maturity. Unlisted companies are remaining private for longer, private credit is expanding, and wholesale investors are gaining access to a broader range of investment opportunities. At the same time, the Australian Securities and Investments Commission is paying much closer attention to how private investments are structured, valued, promoted and managed. For companies raising capital, fund managers, advisers and private market platforms, this shift has important implications. Compliance can no longer be treated as an administrative exercise completed shortly before an offer is launched. It must be embedded in the investment process, from the first financial forecast and marketing presentation through to investor onboarding, ongoing reporting and secondary trading. ASIC’s increased scrutiny should not be interpreted as hostility towards private capital. The regulator has acknowledged that private markets can contribute to innovation, employment, economic growth and greater access to capital. Its concern is whether this growth is occurring with adequate transparency, appropriate governance and accurate communication. For well-managed businesses, that creates an opportunity. As investors become more selective and regulatory expectations rise, credible compliance --- can differentiate an investment opportunity from the rest of the market. It can help companies raise capital more efficiently, establish stronger investor relationships and support future liquidity. In the next phase of Australia’s private market development, compliance will not simply protect a business from regulatory intervention. It will increasingly become part of the value proposition.

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ASIC has made the evolution of Australia’s public and private markets a significant regulatory focus. This reflects the growing economic importance of private capital and the increasing number of businesses, funds and investors operating outside traditional public exchanges. Private markets have historically been associated with experienced institutional investors, venture capital firms, private equity managers and wealthy individuals capable of undertaking their own due diligence. That assumption has sometimes encouraged a lighter approach to disclosure, valuation and investor communication. The composition of the sector, however, is changing. Private market products are reaching a larger and more varied group of wholesale investors. Opportunities are being promoted through digital platforms, email campaigns, social media, webinars and online investor networks. The distinction between a private placement and a widely marketed investment opportunity can consequently become less clear. ASIC has identified opacity as a central concern. Unlike public markets, where listed companies are subject to continuous disclosure and extensive reporting requirements, information about private investments can be fragmented and difficult to compare. ASIC has noted that Australia has limited regulatory reporting for private markets outside certain regulated structures, potentially constraining oversight and increasing the risk of mis-selling or decisions being made without adequate disclosure. ASIC’s 2026 key issues outlook makes clear that private market transparency, valuation and investor protection are no longer peripheral regulatory matters. This does not mean every private company will be subject to the same obligations as an ASX-listed company. It does mean that participants should expect their conduct to be judged against increasingly demanding standards. ---

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One of the most consequential misconceptions in private capital is that an offer made only to wholesale or sophisticated investors attracts little regulatory risk. Wholesale investors do not receive every protection available to retail investors, and certain disclosure requirements may not apply to an eligible wholesale offer. However, the classification is not an exemption from the broader rules governing financial conduct. Prohibitions against false, misleading or deceptive conduct remain highly relevant. Licensing obligations, director duties, anti-money laundering requirements, privacy responsibilities and contractual obligations may also apply, depending on the structure and activities involved. An issuer must be able to establish that investors genuinely qualify for the exemption on which the offer relies. A declaration on an application form should not be treated as a substitute for an appropriate eligibility process. The evidence required will depend on the relevant wholesale investor category and the circumstances of the offer. ASIC has previously warned that marketing must be “true-to-label” regardless of whether an investment is directed at retail or wholesale clients. The Mayfair 101 proceedings demonstrated the danger of assuming that affluent or technically wholesale investors require less care in the way risks, returns and liquidity are described. ASIC alleged that certain products were marketed in ways that gave investors a misleading impression of their characteristics and security. The broader lesson is important for the private capital sector. Wholesale investors may be financially experienced, but they still depend on issuers and intermediaries to present material information accurately. Their status does not permit an investment to be described as lower risk, more liquid, more diversified or more secure than the underlying facts support.

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The modern capital-raising process is heavily influenced by marketing. Investor presentations, campaign pages, EDMs, podcasts, social posts and video interviews can all help a company explain its strategy and reach potential investors. They can also create regulatory exposure. --- A misleading statement does not need to appear in a formal offer document to attract scrutiny. The overall impression created by promotional material matters. A statement may be literally correct but still misleading if it omits an important qualification, presents an uncertain forecast as an expected outcome, or places a prominent benefit beside a risk disclosure that is unlikely to receive equal attention. This is particularly relevant to early-stage and growth companies. Founders are naturally optimistic about the potential of their businesses, but promotional language must distinguish clearly between existing achievements, current capabilities and future ambitions. Expressions such as “market-leading”, “proven”, “fully funded”, “low risk”, “capital protected” or “highly scalable” should not be used casually. Each carries an implication that should be supported by reliable evidence. Statements about total addressable markets can also be misleading if the company has access to only a small portion of the market or faces substantial commercial, regulatory or technical barriers. Forecasts require similar discipline. Revenue projections should be supported by reasonable assumptions, and investors should be able to understand the difference between contracted revenue, a qualified pipeline and management aspirations. If the forecast depends on future funding, regulatory approval, manufacturing capacity or customer acquisition, those dependencies should be made clear. This does not require marketing to become unreadable legal language. In fact, effective compliance should improve communication. Clear, balanced and substantiated content is generally more persuasive to experienced investors than material dominated by exaggerated claims.

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ASIC’s recent enforcement activity indicates that its warnings should be taken seriously. In the 2025–26 financial year, ASIC secured court orders totalling approximately $830 million in civil penalties across banks, superannuation trustees, market participants and financial services firms. The figure represented the highest annual civil penalty total secured by the regulator at that time. ASIC’s enforcement update reflects a regulator prepared to pursue visible and consequential outcomes. --- The individual cases do not all involve private capital, but the direction is unmistakable. ASIC is placing greater emphasis on governance, truthful disclosure, financial reporting and the systems used to prevent misconduct. Greenwashing enforcement provides a particularly useful Australian example. ASIC has taken action where sustainability-related claims were not adequately supported or where exclusions and qualifications were inconsistent with the overall impression given to investors. The principle extends beyond environmental claims. Whether a business is discussing artificial intelligence, social impact, asset security, expected returns or a pathway to liquidity, the language must be supported by the substance. ASIC’s review of private credit provides another indication of what it expects from private market participants. Its surveillance has examined both retail and wholesale funds and identified concerns involving valuation practices, conflicts of interest, terminology, fee disclosure, governance and the treatment of impaired assets. In June 2026, ASIC warned that poor private credit practices remained an enforcement priority and said that multiple investigations were underway. ASIC’s private credit notice also emphasised that managers could not outsource responsibility for practices across the funds-management value chain. Although private credit differs from an equity capital raise, the regulatory themes are readily transferable: decision-making must be documented, valuations must be credible, conflicts must be managed, terminology must be consistent and investors must receive a fair representation of risk.

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Valuation is one of the most difficult issues in private markets because unlisted securities do not usually have a continuously observable price. A company’s value may be derived from a recent funding round, comparable transactions, revenue multiples, discounted cash flow analysis or a combination of methodologies. The absence of a public price does not make every valuation equally defensible. If a capital raise is conducted at a significant increase from an earlier round, investors should be able to understand what has changed. New contracts, regulatory approvals, intellectual property, improved margins or --- verified commercial progress may justify a higher valuation. General confidence about future growth may not. The same issue applies when shareholders seek liquidity through a secondary transaction. A historical capital-raising price should not automatically be presented as the current value of the shares. The company’s circumstances, the rights attached to different share classes, the size of the parcel and the availability of information may all affect the price an investor is willing to pay. A strong valuation process does more than reduce compliance risk. It improves internal discipline and creates a more credible basis for negotiation. Investors are more likely to engage constructively when management can explain not only the number but also the methodology, assumptions and limitations behind it.

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Many businesses attempt to formalise governance after raising institutional capital. Increasingly, the better approach is to establish credible governance before approaching investors. That does not mean an early-stage company needs the committee structure of a major listed corporation. It does mean that the company should be able to demonstrate how significant decisions are made, how conflicts are identified, who approves investor communications and how financial information is verified. Board minutes, related-party transaction policies, delegated authorities, cap table controls and a disciplined process for approving forecasts can materially improve investment readiness. These measures also reduce the risk of inconsistent statements being made by founders, advisers and marketing partners. The quality of a company’s data room is often a useful indicator of its broader governance. Missing registers, inconsistent financial statements, unsigned contracts or unclear intellectual property ownership can delay a transaction and undermine confidence. A complete and logically organised data room signals that the company understands the obligations that accompany external capital. --- For sophisticated investors, governance is not separate from commercial potential. It influences whether the opportunity can be assessed, funded and eventually exited.

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Liquidity is becoming a more important consideration for shareholders in unlisted companies. Employees, founders, early investors and long-term shareholders may want an opportunity to sell some or all of their holdings without waiting for an IPO or trade sale. However, sustainable liquidity depends on information. Buyers cannot price risk effectively if company updates are irregular, valuations are poorly explained or the rights attached to the securities are unclear. Sellers may also develop unrealistic price expectations if they rely on an old funding round or an internal valuation that does not reflect current conditions. An organised Trading Hub can provide the framework through which eligible buyers and sellers connect, but the quality of participation will still depend on the information available and the conduct of the parties involved. Clear transaction processes, verified investor eligibility, accurate company information and appropriately controlled communications contribute directly to confidence. This is where compliance and liquidity intersect. A company that maintains reliable records, communicates consistently and addresses material developments promptly is better positioned to support informed secondary trading. In that sense, compliance is not an obstacle to liquidity. It is part of the infrastructure that makes liquidity possible.

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Compliance is sometimes viewed as a source of delay. In practice, weak preparation is more likely to slow a capital raise than a well-designed compliance process. When claims have already been verified, the corporate structure is clear, eligibility procedures are established and the data room is complete, due diligence can progress more efficiently. Advisers spend less time resolving inconsistencies, and investors can reach decisions with greater confidence. --- The opposite is also true. If management must revise forecasts during the raise, correct promotional material or explain discrepancies in the cap table, momentum can quickly be lost. Sophisticated investors may interpret these issues as evidence of broader operational weakness. A compliance-ready company is therefore more investable. It can answer questions promptly, demonstrate control over its information and reduce the perceived execution risk associated with the transaction.

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Private investment always involves uncertainty. Investors may accept technology risk, execution risk, illiquidity and the possibility of capital loss when they believe they are being given a fair opportunity to assess those risks. What they are less likely to accept is avoidable ambiguity. If an issuer selectively presents information, changes definitions between reporting periods or understates material challenges, confidence can disappear quickly. The strongest private market participants are beginning to recognise that transparency is not a concession made to regulators. It is an asset. Clear reporting can deepen relationships with existing shareholders. Evidence-based marketing can improve the quality of investor engagement. Sound governance can support institutional participation, while accurate records and disciplined disclosure can help facilitate future transactions. ASIC’s increased attention will undoubtedly create additional pressure for parts of the sector. It will also reward businesses that have already invested in strong systems and responsible conduct.

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Australia needs private capital to fund innovation, business expansion, infrastructure and employment. It also needs investors to have confidence that private opportunities are being presented and managed responsibly. The two objectives are not in conflict. A private market that offers clearer information, stronger governance and better valuation practices should be capable of attracting more sustainable participation over time. For platforms such as PrimaryMarkets, which facilitates capital raising and trading in unlisted shares for wholesale and sophisticated investors, the --- opportunity is to help bring greater structure and transparency to a market that has traditionally been fragmented. Issuers gain access to eligible investors, while investors gain a more organised environment in which to discover and assess opportunities. The message for companies is straightforward. Compliance should begin before the campaign is written, before the valuation is promoted and before investors enter the data room. It should influence how the opportunity is structured, described, documented and managed after the transaction. ASIC is watching, but so are investors. In an increasingly competitive private capital market, the organisations that communicate accurately, govern responsibly and treat compliance as a strategic capability will be the ones best placed to earn trust, attract capital and create lasting liquidity.

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As private markets continue to evolve, investors and companies are increasingly seeking greater access, transparency and liquidity. PrimaryMarkets is an Australian-based platform that helps facilitate capital raising and secondary trading opportunities in private companies, managed funds and other unlisted investments. Through its capital raising and trading solutions, PrimaryMarkets connects sophisticated and wholesale investors with a diverse range of private market opportunities across sectors including technology, healthcare, energy, resources, property and alternative assets. The platform also assists companies and fund managers to access growth capital while providing existing shareholders and unitholders with potential liquidity pathways. By combining technology with market expertise, PrimaryMarkets is helping to modernise private capital markets, making it easier for investors to discover opportunities and for companies to connect with capital. As the private market ecosystem continues to mature, platforms such as PrimaryMarkets are playing an increasingly important role in improving access, facilitating transactions and supporting the efficient flow of capital.

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And that brings us to the end of this episode of Unlocking Liquidity. Thanks for spending your time with us, we hope today’s conversation gave you a fresh --- perspective on private markets and how liquidity is evolving. If you enjoyed the episode, please follow or subscribe wherever you listen, and feel free to share it with someone who’d get value from it. For more insights, opportunities and episodes, visit PrimaryMarkets.com. Until next time, thanks for listening, and we’ll see you in the next conversation.