Australian Securities and Investment Commission Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors, November 2011


Step 1: Click Next button to show the guideline or "Before" example.
Step 2: Click Next button again to show the explanation or
"After" Plain English revision; Repeat Steps 1 and 2.
Tool: Use the active voice.Explanation: Avoid using the passive voice, where possible, as it can hide details such as who is responsible for actions. In many cases, the passive voice also requires more words and is less engaging.
Original (passive voice):

The Offer Information Line is available for more information.
Rewritten (active voice):

You should call the Offer Information Line for more information.
Tool: Use direct language (personal pronouns).Explanation: It is more engaging to refer to an ‘applicant’ as ‘you’ and the ‘company’ as ‘we’. It can also be more concise. You should ensure there is no confusion about who ‘you’ and ‘we’ are.
Original (using the word "applicant")

Applicants should consider obtaining legal advice.
Rewritten ("applicant" replaced with "you")

You should consider obtaining legal advice.
Tool: Use the positive and avoid double negatives.Explanation: It is generally easier to understand sentences that are phrased positively rather than negatively.
Original (with double negative and written negatively):

It is not unlikely that the company will have trouble paying its debts if the offer is not successful.
Rewritten (without double negative and written positively):

It is likely that the company will have trouble paying its debts if the offer is unsuccessful.
Tool: Use verbs rather than nouns, where possible.Explanation: Verbs and the present tense are usually simpler, more direct and concise.

Payment should be made by cheque.

Please pay by cheque.
Tool: Avoid overusing definitions.Explanation: Definitions are very useful in providing clarity of meaning, but should not be overused.

Use one definition that is specific rather than a definition that will lead readers to other definitions, where possible.

Avoid defining commonly understood terms.

If a term is only repeated two or three times, it may not need to be defined (depending on the length of the definition).
Tool: Choose simple words for definitions.Explanation: The defined terms should be short. Select a defined term that has meaning and facilitates easy reading of sentences that include the defined term.

Avoid using a defined term that has a common meaning that is contrary to or not compatible with the meaning given in the definition.
Tool: Avoid including additional content in definitions and using the defined term within the definition.Explanation: You should avoid including important information about the offer in a definition. You should also avoid including important qualifications in a definition: for example, ‘The Offer Price is $1.00 per share plus a further $10.00 per share due on the Instalment Date’. If you include important information in the definition, it is likely the information will not be given appropriate prominence and may be missed.

The definition should make sense each time it is used. You should avoid using the defined term within its own definition as this can be circular and confusing.
Original (definition of "closing date'):

"The date on which the offer closes. Applicants should ensure their application is submitted by the closing date".
Rewritten (definition of "closing date'):

"The date on which the offer closes, being 1 June 2011 unless extended."
Tool: Avoid jargon, where possible.Explanation: If technical terms are necessary, they should be explained the first time they are used or in a glossary, or both.

Terms such as ‘pari passu’, ‘swaps’, ‘passive portfolio management’ and ‘leveraged’ should be defined or explained.
Tool: Use short sentences.Explanation: Long sentences prevent readers from understanding information easily. Each idea should be presented in a separate sentence. You should also remove any surplus words.
Tool: Use industry accepted terms.Explanation: You should use terminology that is consistent with widely accepted industry guidelines, and use it in the same sense that it is used in the guidelines.

Exercises created by Atty. Gerry T. Galacio; all rights reserved. You can freely use these exercises, but you must not upload them to any website or the cloud. For comments, questions, corrections, or suggestions, email


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