REG - Macquarie Group Ltd - Publication of a Prospectus <Origin Href="QuoteRef">MQG.AX</Origin> - Part 4
15/06/2016 07:05
- Part 4: For the preceding part double click ID:nRSO2097Bc
additional remote connectivity solutions, the
outsourcing of some of the Macquarie Group's business operations and the threat of cyber terrorism. Third parties with
which the Macquarie Group does business, as well as other third parties with which the Macquarie Group's clients do
business, can also be sources of operational risk to it, including with respect to security breaches affecting such
parties, breakdowns or failures of the systems or misconduct by the employees of such parties and cyber-attacks. Such
incidents may require the Macquarie Group to take steps to protect the integrity of its own operational systems or to
safeguard its confidential information and that of its clients, thereby increasing its operational costs and potentially
diminishing customer satisfaction. It is possible that the Macquarie Group may not be able to anticipate or to implement
effective measures to prevent or minimise damage that may be caused by all information security threats, because the
techniques used can be highly sophisticated and can evolve rapidly, and those that would perpetrate attacks can be well
resourced. An information security failure could have serious consequences for the Macquarie Group including operational
disruption, financial losses, reputational damage, theft of intellectual property and customer data, and could result in
violations of applicable privacy laws, all of which could have a material impact on the Macquarie Group.
The Macquarie Group's businesses, including its commodities activities and particularly its physical commodities trading
businesses, subject the Macquarie Group to the risk of unforeseen, hostile or potential catastrophic events, and
environmental, reputational and other risks that may expose it to significant liabilities and costs.
The Macquarie Group's businesses are subject to the risk of unforeseen, hostile or catastrophic events, many of which are
outside of its control, including natural disasters, extreme weather events (such as persistent winter storms or protracted
droughts) leaks, spills, explosions, release of toxic substances, fires, accidents on land or at sea, terrorist attacks or
other hostile or catastrophic events. Additionally, rising climate change concerns may lead to additional regulation that
could increase the operating costs and/or reduce the profitability of the Macquarie Group's investments. In addition, the
Macquarie Group relies on third party suppliers or service providers to perform their contractual obligations, and any
failure on their part could adversely affect the Macquarie Group's business. The Macquarie Group may also not be able to
obtain insurance to cover some of these risks and the insurance that it has may be inadequate to cover its losses.
The occurrence of any such events may prevent MGL and the Macquarie Group from performing under their agreements with
clients, may impair their operations or financial results, and may result in litigation, regulatory action, negative
publicity or other reputational harm.
Conflicts of interest could limit its current and future business opportunities.
As the Macquarie Group expands its businesses and its client base, it increasingly has to address potential or perceived
conflicts of interest, including situations where its services to a particular client conflict with, or are perceived to
conflict with, its own proprietary investments or other interests or with the interests of another client, as well as
situations where one or more of its businesses have access to material non-public information that may not be shared with
other businesses within the Macquarie Group. While MGL believes it has adequate procedures and controls in place to
address conflicts of interest, including those designed to prevent the improper sharing of information among its
businesses, appropriately dealing with conflicts of interest is complex and difficult, and its reputation could be damaged
and the willingness of clients to enter into transactions may be adversely affected if MGL fails, or appears to fail, to
deal appropriately with conflicts of interest. In addition, potential or perceived conflicts could materially adversely
affect MGL's and the Macquarie Group's reputation or business, including give rise to claims by and liabilities to clients,
litigation or enforcement actions or discourage clients or counterparties to do business with them.
Litigation, regulatory actions and contingent liabilities may adversely impact MGL's and the Macquarie Group's results of
operations.
MGL and the Macquarie Group may, from time to time, be subject to material litigation, regulatory actions and contingent
liabilities, for example, as a result of inappropriate documentation of contractual relationships, class actions or
regulatory violations, which, if they crystallise, may adversely impact upon their results of operation and financial
condition in future periods or their reputation. MGL and the Macquarie Group entities regularly obtain legal advice and
make provisions, as deemed necessary. There is a risk that any losses may be larger than anticipated or provided for or
that additional litigation, regulatory actions or other contingent liabilities may arise. Furthermore, even where monetary
damages may be relatively small, an adverse finding in a regulatory or litigation matter could harm MGL's and the Macquarie
Group's reputation or brand, thereby adversely affecting their business.
In conducting its businesses around the world, the Macquarie Group is subject to political, economic, legal, operational
and other risks.
In conducting its businesses and maintaining and supporting its global operations, the Macquarie Group is subject to risks
of possible nationalisation, expropriation, price controls, capital controls, exchange controls, economic sanctions and
other restrictive governmental actions. The Macquarie Group could also be affected by the occurrence of diseases.
Geopolitical instability, such as threats of, potential for, or actual conflict, occurring around the world, may also
adversely affect global financial markets, general economic and business conditions and the Macquarie Group's ability to
continue operating or trading in a country, which in turn may adversely affect the Macquarie Group's business, operations
and financial condition.
In addition, in some countries in which the Macquarie Group does business, or may in the future do business, in particular
in emerging markets, the laws and regulations applicable to the financial services industry are uncertain and evolving, and
it may be difficult for the Macquarie Group to determine the exact requirements of local laws in every market. The
Macquarie Group's inability to remain in compliance with local laws in a particular market could have a significant and
negative effect not only on its businesses in that market but also on its reputation generally. The Macquarie Group is also
subject to the enhanced risk that transactions it structures might not be legally enforceable in all cases.
The Macquarie Group is also subject in its operations worldwide to rules and regulations relating to corrupt and illegal
payments and money laundering, as well as laws, sanctions and economic trade restrictions relating to doing business with
certain individuals, groups and countries. While the Macquarie Group has invested and continues to invest in its anti-money
laundering ("AML"), sanctions, and anti-bribery and anti-corruption compliance programs, the geographical diversity of its
operations, employees, clients and customers, as well as the vendors and other third parties that it deals with, increases
the risk that it may be found in violation of such rules or regulations and any such violation could subject the Macquarie
Group to significant penalties or adversely affect its reputation.
The Macquarie Group is also subject to the risk that its agreements do not reflect the commercial intent of the parties,
especially for complex transactions including those which involve derivatives.
There are restrictions on the ability of subsidiaries, such as MBL, to make payments to MGL.
MGL is a holding company and many of its subsidiaries, including its broker-dealer, bank and insurance subsidiaries, such
as MBL, are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from those subsidiaries
to MGL. Restrictions or regulatory action of that kind could impede access to funds that MGL needs to make payments on its
obligations, including debt obligations, or dividend payments. In particular, the availability of MBL's funding to meet
the obligations of MGL or the Non-Banking Group is subject to regulatory restrictions.
Failure of the Macquarie Group's insurance carriers or its failure to maintain adequate insurance cover could adversely
impact its results of operations.
The Macquarie Group maintains insurance that it considers to be prudent for the scope and scale of its activities. If the
Macquarie Group's carriers fail to perform their obligations to the Macquarie Group and/or its third party cover is
insufficient for a particular matter or group of related matters, its net loss exposure could adversely impact its results
of operations.
The Macquarie Group is subject to risks in using custodians.
Certain funds the Macquarie Group manage depend on the services of custodians to carry out certain securities transactions.
In the event of the insolvency of a custodian, the funds might not be able to recover equivalent assets in full (including
any cash held on its behalf) as they will rank among the custodian's unsecured creditors in relation to assets which the
custodian borrows, lends or otherwise uses.
(b) Risks relating to PD Debt Instruments and the market generally
Australian insolvency laws
In the event that MGL becomes insolvent, insolvency proceedings will be governed by Australian law or the law of another
jurisdiction determined in accordance with Australian law. Australian insolvency laws are, and the laws of that other
jurisdiction can be expected to be, different from the insolvency laws of other jurisdictions. In particular, the voluntary
administration procedure under the Corporations Act 2001 of Australia ("Corporations Act"), which provides for the
potential re-organisation of an insolvent company, differs significantly from similar provisions under the insolvency laws
of other jurisdictions. If MGL becomes insolvent, the treatment and ranking of holders of PD Debt Instruments ("PD Debt
Instrument Holders") and MGL's shareholders under Australian law, and the laws of any other jurisdiction determined in
accordance with Australian law, may be different from the treatment and ranking of PD Debt Instrument Holders and MGL's
shareholders if MGL were subject to the bankruptcy laws or the insolvency laws of other jurisdictions.
The PD Debt Instruments do not have the benefit of any third party guarantees or security
Investors should be aware that no guarantee is given in relation to the PD Debt Instruments by the shareholders of MGL or
any other person. MGL is not an Australian ADI and the PD Debt Instruments are not guaranteed by the government of
Australia. Accordingly, in the event that MGL is unable to fulfil its obligations under the PD Debt Instruments, such
obligations would not necessarily be assumed by any other person.
Investors should also be aware that the PD Debt Instruments and related Coupons will be unsecured obligations of MGL. To
the extent MGL incurs secured obligations, the PD Debt Instruments will rank behind those secured obligations to the extent
of the value of the property granted to secure those obligations. Consequently, any such secured obligations will rank
senior in the right of payment to an investor of PD Debt Instruments to the extent of the value of the assets granted to
secure those obligations.
Issue price and optional redemption risks
An optional redemption feature is likely to limit the market value of PD Debt Instruments. During any period when MGL may
elect to redeem the PD Debt Instruments, the market value of those PD Debt Instruments generally will not rise
substantially above the price at which they can be redeemed. This may also be true prior to any redemption period. MGL
may be expected to redeem PD Debt Instruments when its cost of borrowing is lower than the interest rate on the PD Debt
Instruments. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective
interest rate as high as the interest rate on the PD Debt Instruments being redeemed and may only be able to do so at a
significantly lower rate. Potential investors should consider reinvestment risk in light of other investments available at
that time.
Modifications and waivers
The Conditions contain provisions for calling meetings of PD Debt Instrument Holders to consider matters affecting their
interests generally. These provisions permit defined majorities to bind all PD Debt Instrument Holders including PD Debt
Instrument Holders who did not attend and vote at the relevant meeting and PD Debt Instrument Holders who voted in a manner
contrary to the majority.
Change of Law
The Conditions are based on the relevant law in effect as at the date of the issue of the relevant PD Debt Instruments. No
assurance can be given as to the impact of any possible judicial decision, change to law or administrative practice after
the date of issue of the relevant PD Debt Instruments, including developments which may require withholding or deduction to
be made by MGL from payments of amounts due in respect of PD Debt Instruments (see "Taxation - United States Taxation -
U.S. Foreign Account Tax Compliance Act" on pages 146 to 147).
(c) Risks related to the market for PD Debt Instruments generally
The secondary market generally
PD Debt Instruments may have no established trading market when issued, and one may never develop. If a market does
develop, it may not be liquid. Therefore, investors may not be able to sell their PD Debt Instruments easily or at prices
that will provide them with a yield comparable to similar investments that have a developed secondary market. This is
particularly the case for PD Debt Instruments that are especially sensitive to interest rate, currency or market risks, are
designed for specific investment objectives or strategies or have been structured to meet the investment requirements of
limited categories of investors. These types of PD Debt Instruments generally would have a more limited secondary market
and more price volatility than conventional debt securities. Illiquidity may have a severely adverse effect on the market
value of PD Debt Instruments. No assurance of a secondary market or a market price for the PD Debt Instruments is provided
by MGL.
In addition, PD Debt Instrument Holders should be aware of the risk that global credit market conditions may result in a
general lack of liquidity in the secondary market for instruments similar to the PD Debt Instruments. Such lack of
liquidity may result in investors suffering losses on the PD Debt Instruments in secondary resales even if there is no
decline in the performance of the assets of MGL.
Listing
An application will be made for the PD Debt Instruments issued under the Programme to be admitted to the Official List and
to the London Stock Exchange for such PD Debt Instruments to be admitted to trading on the Market. No assurance can be
given that if and once listed, the PD Debt Instruments will at all times remain listed on the Official List or remain
admitted for trading on the Market and it may not be possible to list the PD Debt Instruments on any other stock or
securities exchange.
Exchange rate risks and exchange controls
MGL will pay principal and interest on the PD Debt Instruments in the relevant specified currency ("Specified Currency").
This presents certain risks relating to currency conversions if an investor's financial activities are denominated
principally in a currency or currency unit (the "Investor's Currency") other than the Specified Currency. These include
the risk that exchange rates may significantly change (including changes due to devaluation of the Specified Currency or
revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may
impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to the Specified
Currency would decrease (1) the Investor's Currency-equivalent yield on the PD Debt Instruments, (2) the Investor's
Currency equivalent value of the principal payable on the PD Debt Instruments, and (3) the Investor's Currency equivalent
market value of the PD Debt Instruments.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely
affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no
interest or principal.
In addition, events may occur that, from a legal or practical perspective, make it impossible or not reasonably practicable
to convert one currency into another currency, as may be required in order to make a determination or payment in respect of
the PD Debt Instruments. The occurrence of such an inconvertibility event may result in payment under the PD Debt
Instruments being delayed and/or an investor receiving payment in a currency other than the Specified Currency.
Interest rate risks
Investment in fixed rate PD Debt Instruments involves the risk that subsequent changes in market interest rates may
adversely affect the value of the fixed rate PD Debt Instruments.
The market values of securities issued at a substantial discount or premium to their nominal amount tend to fluctuate more
in relation to general changes in interest rates than do prices for interest-bearing securities issued at par value.
Generally, the longer the remaining term of the securities, the greater the price volatility as compared to
interest-bearing securities issued at par value with comparable maturities.
PD Debt Instrument Holders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in
interest rates may cause a fall in bond prices.
Credit ratings may not reflect all risks
One or more independent credit rating agencies may assign credit ratings to an issue of PD Debt Instruments. The ratings
may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and
other factors that may affect the value of the PD Debt Instruments. A credit rating is not a recommendation to buy, sell
or hold securities and may be subject to suspension, cancellation, reduction or withdrawal at any time by the assigning
rating agency.
In general, European regulated investors are restricted under the CRA Regulation from using credit ratings for regulatory
purposes, unless such ratings are issued by a credit rating agency established in the EU and registered under the CRA
Regulation (and such registration has not been withdrawn or suspended), subject to transitional provisions that apply in
certain circumstances whilst the registration application is pending. Such general restriction will also apply in the case
of credit ratings issued by non-EU credit rating agencies, unless the relevant credit ratings are endorsed by an
EU-registered credit rating agency or the relevant non-EU rating agency is certified in accordance with the CRA Regulation
(and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). The list of
registered and certified rating agencies published by the ESMA on its website in accordance with the CRA Regulation is not
conclusive evidence of the status of the relevant rating agency included in such list, as there may be delays between
certain supervisory measures being taken against a relevant rating agency and the publication of the updated ESMA list.
Certain information with respect to the Issuer's ratings and the credit rating agencies which have assigned such ratings is
set out under the heading "Important Notices" at the beginning of this Base Prospectus. Where an issue of PD Debt
Instruments is rated, such rating will be specified in the relevant Final Terms and may not necessarily be the same as the
rating assigned to MGL.
(d) Risks related to PD Debt Instruments denominated in Renminbi
There is only limited availability of Renminbi outside of the PRC, which may affect the liquidity of the PD Debt
Instruments denominated in Renminbi and the Macquarie Group's ability to source Renminbi outside of the PRC to service such
PD Debt Instruments.
As a result of the restrictions by the PRC government on cross-border Renminbi fund flows, the availability of Renminbi
outside of the PRC is limited.
While the People's Bank of China ("PBOC") has entered into agreements on the clearing of Renminbi business with financial
institutions in a number of financial centres and cities (the "Renminbi Clearing Banks"), including but not limited to Hong
Kong and are in the process of establishing Renminbi clearing and settlement mechanisms in several other jurisdictions (the
"Settlement Agreements"), the current size of Renminbi-denominated financial assets outside the PRC is limited.
There are restrictions imposed by PBOC on Renminbi business participating banks in respect of cross-border Renminbi
settlement, such as those relating to direct transactions with PRC enterprises. Renminbi business participating banks do
not have direct Renminbi liquidity support from PBOC. The RMB Clearing Banks only have access to onshore liquidity support
from PBOC for the purpose of squaring open positions of participating banks for limited types of transactions and are not
obliged to square for participating banks any open positions resulting from other foreign exchange transactions or
conversion services and the participating banks will need to source Renminbi from the market outside the PRC to square such
open positions.
Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its growth is subject to
many constraints as a result of PRC laws and regulations on foreign exchange. There can be no assurance that new PRC
regulations will not be promulgated or the Settlement Agreements will not be terminated or amended in the future which will
have the effect of restricting availability of Renminbi outside the PRC. The limited availability of Renminbi outside the
PRC may affect the liquidity of the PD Debt Instruments denominated in Renminbi. To the extent Macquarie Bank is required
to source Renminbi outside the PRC to service the PD Debt Instruments, there is no assurance that the Macquarie Bank will
be able to source such Renminbi on satisfactory terms, if at all.
The Renminbi is not fully freely convertible and there are significant restrictions on remittance of Renminbi into and
outside the PRC which may adversely affect the liquidity of the PD Debt Instruments denominated in Renminbi.
Renminbi is not freely convertible at present. The PRC government continues to regulate conversion between Renminbi and
foreign currencies, including the Hong Kong dollar, despite the significant reduction in control by it in recent years over
trade transactions involving import and export of goods and services as well as other frequent routine foreign exchange
transactions. These transactions are known as current account items.
However, remittance of Renminbi by foreign investors into the PRC for purposes such as capital contributions, known as
capital account items, is generally only permitted upon obtaining specific approvals from the relevant authorities on a
case-by-case basis and subject to a strict monitoring system. Regulations in the PRC on the remittance of Renminbi into
the PRC for settlement of capital account items are developing gradually.
On 13 October 2011, PBOC promulgated the Administrative Measures on Renminbi Settlement of Foreign Direct Investment (the
"PBOC FDI Measures") as part of the implementation of PBOC's detailed Renminbi foreign direct investments ("FDI") accounts
administration system. The system covers almost all aspects in relation to FDI, including capital injections, payments for
the acquisition of PRC domestic enterprises, repatriation of dividends and other distributions, as well as Renminbi
denominated cross-border loans. On 14 June 2012, PBOC further issued the implementing rules for the PBOC FDI Measures.
Under the PBOC FDI Measures, special approval for FDI and shareholder loans from PBOC, which was previously required, is no
longer necessary. In some cases however, post-event filing with PBOC is still necessary.
On 5 July 2013, PBOC promulgated the Circular on Policies related to Simplifying and Improving Cross-border Renminbi
Business Procedures, which simplifies the operating procedures on current account cross-border Renminbi settlement and
further publishes policies with respect to issuance of offshore Renminbi bonds by onshore nonfinancial institutions.
On 3 December 2013, the Ministry of Commerce of the PRC ("MOFCOM") promulgated the Circular on Issues in relation to
Cross-border Renminbi FDI (the "MOFCOM Circular"), which became effective on 1 January 2014, to further facilitate FDI by
simplifying and streamlining the applicable regulatory framework. Pursuant to the MOFCOM Circular, the appropriate office
of MOFCOM and/or its local counterparts were authorised to grant written approval to each FDI and specify Renminbi FDI and
the amount of capital contribution in the approval. Unlike previous MOFCOM regulations on FDI, the MOFCOM Circular removes
the approval requirement for foreign investors who intend to change the currency of their existing capital contribution
from a foreign currency to Renminbi. In addition, the MOFCOM Circular also clearly prohibits the FDI funds from being used
for any investment in securities and financial derivatives (except for investment in the PRC listed companies as strategic
investors) or for entrustment loans in the PRC.
As the above measures and circulars are still relatively new, how they will be applied in practice still remains subject to
interpretation and application by the relevant authorities in the PRC.
Although starting from 1 October 2016, the Renminbi will be added to the Special Drawing Rights basket created by the
International Monetary Fund, there is no assurance that the PRC government will continue to gradually liberalise control
over crossborder remittance of Renminbi in the future or that new regulations in the PRC will not be promulgated in the
future which have the effect of restricting or eliminating the remittance of Renminbi into or outside the PRC. In the
event that funds cannot be repatriated outside the PRC in Renminbi, this may affect the overall availability of Renminbi
outside the PRC and the ability of the Macquarie Bank to source Renminbi to finance its obligations under the PD Debt
Instruments denominated in Renminbi.
The investment in the PD Debt Instruments denominated in Renminbi is subject to exchange rate and interest rate risks.
The value of Renminbi against the Hong Kong dollar and other foreign currencies fluctuates from time to time and is
affected by changes in the PRC and international political and economic conditions as well as many other factors. All
payments of interest and principal with respect to the PD Debt Instruments will be made in Renminbi unless otherwise
specified. As a result, the value of these Renminbi payments may vary with the changes in the prevailing exchange rates in
the marketplace. If the value of Renminbi depreciates against the Hong Kong dollar or other foreign currencies, the value
of the investment made by a PD Debt Instrument Holder in Hong Kong dollars or any other foreign currency terms will
decline.
Payments in respect of the PD Debt Instruments denominated in Renminbi will only be made to investors in the manner
specified in the terms and conditions of the relevant PD Debt Instruments.
Investors may be required to provide certification and other information (including Renminbi account information) in order
to be allowed to receive payments in Renminbi in accordance with the Renminbi clearing and settlement system for
participating banks in Hong Kong. All payments to investors in respect of the PD Debt Instruments denominated in Renminbi
will be made solely by (i) when the PD Debt Instruments are represented by global certificates held with the common
depositary for Euroclear Bank S.A./N.V. ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg")
or a sub-custodian for the Central Moneymarkets Unit Service ("CMU Service"), transfer to a Renminbi bank account
maintained in Hong Kong in accordance with prevailing rules and procedures of the CMU Service, Euroclear or Clearstream or
(ii) when the PD Debt Instruments are in definitive form, transfer to a Renminbi bank account maintained in Hong Kong in
accordance with prevailing rules and regulations. The Issuer cannot be required to make payment by any other means
(including in any other currency or by transfer to a bank account in the PRC).
3. Information about the Programme
The following is an overview of the Programme and the key terms of the PD Debt Instruments. The full text of the terms and
conditions of the PD Debt Instruments are contained in Section 6 (Terms and Conditions). It is important that you read the
entirety of this Base Prospectus before you invest in any PD Debt Instruments. It is also recommended that you consult
your financial adviser or any other professional adviser before you decide to purchase any PD Debt Instruments.
What is the Programme? The Programme is a debt issuance programme under which Macquarie Group Limited, as the Issuer under the Programme, may, from time to time, issue debt instruments. In this Conditions of the PD Debt Instruments beginning on page 59
Base Prospectus these debt instruments are referred to as PD Debt Instruments. The Programme is constituted by a set of master documents containing standard terms and
conditions and other contractual provisions that can be used by the Issuer to undertake any number of issues of PD Debt Instruments from time to time in the future,
subject to a maximum limit of US$10,000,000,000 (or its equivalent in other currencies, as such may be updated from time to time) in aggregate nominal amount of debt
instruments issued and outstanding at any time under the Programme.The standard terms and conditions that can be used by the Issuer to undertake each issue of PD Debt
Instruments are set out in this Base Prospectus in Section 6 (Terms and Conditions) and referred to herein as the Conditions.The Programme was updated on 14 June 2016.
How are PD Debt Instruments issued under the Programme? Whenever the Issuer decides to issue PD Debt Instruments, it undertakes what is commonly referred to as a "drawdown". On a drawdown, documents which are supplementary to Conditions of the PD Debt Instruments beginning on page 59 and the Forms of Final Terms beginning on page 97
the Programme master documents are produced, indicating which provisions in the master documents are relevant to that particular drawdown and setting out the terms of the
PD Debt Instruments to be issued under the drawdown. The key supplementary documents of which you will need to be aware when deciding whether to invest in PD Debt
Instruments are: (a) any supplement to this Base Prospectus published after the date of this Base Prospectus and (b) the applicable Final Terms for such PD Debt
Instruments.In the event of any significant new factor, material mistake or inaccuracy relating to information included in this Base Prospectus which is capable of
affecting the assessment of any PD Debt Instruments and whose inclusion or removal from this Base Prospectus is necessary for the purpose of allowing an investor to make
an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the Issuer and the rights attaching to the PD Debt
Instruments, the Issuer will prepare and publish a supplement to this Base Prospectus or prepare and publish a new base prospectus, in each case, for use in connection
with such PD Debt Instruments and any subsequent issue of PD Debt Instruments.The Conditions cater for all the permutations of provisions that the Issuer envisages being
likely to be applicable to issues under the Programme, with the final terms document for each issue (referred to herein as the Final Terms) setting out the specific
commercial terms applicable to the issue and the extent to which the provisions in the Conditions of the PD Debt Instruments are applicable. Each Final Terms is intended
to be read alongside the Conditions, and the two together provide the specific terms of the PD Debt Instruments relevant to a specific drawdown.
What types of PD Debt Instruments may be issued under the Programme? Four types of PD Debt Instruments may be issued under this Base Prospectus: Fixed Rate PD Debt Instruments, Floating Rate PD Debt Instruments, Fixed/Floating Interest Conditions of the PD Debt Instruments beginning on page 59 and the Forms of Final Terms beginning on page 97
Rate Basis PD Debt Instruments and Zero Coupon PD Debt Instruments, or any combination of these. Fixed Rate PD Debt Instruments are PD Debt Instruments where the interest
rate payable by the Issuer is determined prior to issue, and remains fixed throughout the life of the PD Debt Instruments. See Section 4 (How the Return on Your
Investment is Calculated) for a worked example showing how the return on an issue of Fixed Rate PD Debt Instruments is calculated.Floating Rate PD Debt Instruments are PD
Debt Instruments where the interest rate is calculated by reference to a fluctuating benchmark rate. Under the Programme, that benchmark rate may be either an ISDA
defined rate, the Australian Bank Bill Swap Rate (BBSW), the London interbank offered rate (LIBOR), the Euro-zone interbank offered rate (EURIBOR), the New Zealand Bank
Bill Reference Rate (BKBM), the Hong Kong interbank offered rate (HIBOR), the Toronto interbank offered rate (BA-CDOR) or the Singapore interbank offered rate (SIBOR).
The floating interest rate is recalculated on or around the start of each new interest period and applies for the length of that interest period. Therefore, Floating
Rate PD Debt Instruments in effect have a succession of fixed interest rates. The floating interest rate will be based on the benchmark rate and may also include a fixed
percentage margin which is added to the benchmark rate. See Section 4 (How the Return on Your Investment is Calculated) for a worked example showing how the return on an
issue of Floating Rate PD Debt Instruments is calculated.Fixed/Floating Interest Rate Basis PD Debt Instruments are PD Debt Instruments where the basis upon which
interest accrues (and on which the interest rate is determined) will change from one basis to another during the term of the PD Debt Instrument. The relevant interest
rate basis may be a fixed rate or a fluctuating benchmark rate for a particular period, and the resultant interest rate and the amount of interest payable is determined
in accordance with the Conditions for a Fixed Rate PD Debt Instrument and a Floating Rate PD Debt Instrument (as applicable, and as described above) and may then change
to another rate or basis for a subsequent period (for example, changing from a fixed rate to a fluctuating benchmark rate). Zero Coupon PD Debt Instruments are PD Debt
Instruments which do not carry any interest but are generally issued at a deep discount to their nominal amount. Zero Coupon PD Debt Instruments are repaid at their full
amount. Therefore, if you purchase Zero Coupon PD Debt Instruments on their issue date and hold them to maturity, your return will be the difference between the issue
price and the nominal amount of the Zero Coupon PD Debt Instruments paid on maturity. Alternatively, you might realise a return on Zero Coupon PD Debt Instruments
through a sale prior to their maturity. See Section 4 (How the Return on Your Investment is Calculated) for a worked example showing how the return on an issue of Zero
Coupon PD Debt Instruments is calculated.The specific details of each PD Debt Instrument issued will be specified in the applicable Final Terms.
How will the price of the PD Debt Instruments be determined? PD Debt Instruments may be issued at their nominal amount or at a discount or premium to their nominal amount. The price and amount of PD Debt Instruments to be issued N/A
under the Programme will be determined by the Issuer and the relevant Dealer or Dealers at the time of "pricing" of the PD Debt Instruments in accordance with prevailing
market conditions. The issue price for each Tranche will be specified in the applicable Final Terms.
What is the yield on Fixed Rate PD Debt Instruments? The yield in respect of each issue of Fixed Rate PD Debt Instruments will be calculated on the basis of the issue price and specified in the applicable Final Terms. N/A
Yield is not an indication of future price. The Final Terms in respect of any Floating Rate PD Debt Instruments will not include any indication of yield.
Will the PD Debt Instruments issued under the Programme have a credit rating? PD Debt Instruments issued under the Programme may be specifically rated (as described in the applicable Final Terms). Any such ratings will not necessarily be the same N/A
as the rating assigned to the Issuer or to any other issues of PD Debt Instruments. A credit rating is not a recommendation to buy, sell or hold securities and may be
subject to suspension, reduction or withdrawal at any time by the assigning rating agency.
Will I be able to trade the PD Debt Instruments issued under the Programme? Application has been made to admit PD Debt Instruments issued during the period of 12 months from the date of this Base Prospectus to the Official List of the UK Listing N/A
Authority and to admit them to trading on Market. Once listed, the PD Debt Instruments may be purchased or sold directly or through an intermediary. The market price of
the PD Debt Instruments may be higher or lower than their issue price depending on, among other things, the level of supply and demand for the PD Debt Instruments,
movements in interest rates and the financial performance of the Issuer (see Section 2 (Risk Factors)). There is no prior or active trading market for the PD Debt
Instruments and such trading market may not develop.
Who is issuing the PD Debt Instruments? The PD Debt Instruments will be issued by Macquarie Group Limited. Conditions of the PD Debt Instruments beginning on page 59
What will I get on redemption? Unless previously redeemed (at the option of the investor or Issuer in the circumstances set out in the Conditions) or purchased and cancelled, the PD Debt Instruments Conditions of the PD Debt Instruments beginning on page 59
will be redeemed at their nominal amount on maturity.
Are the PD Debt Instruments secured? No, as of the date the PD Debt Instruments are issued, the obligations of the Issuer to pay interest and principal on the PD Debt Instruments will not be secured either N/A
by any of the Issuer's or any other member of the Macquarie Group's assets or otherwise.
Do the PD Debt Instruments have voting rights? PD Debt Instrument Holders have certain rights to vote at meetings of the PD Debt Instrument Holders, but are not entitled to vote at any meeting of shareholders of the Conditions of the PD Debt Instruments (Condition 16.1 - Meetings of PD Debt Instrument Holders,) beginning on page
Issuer.The Conditions of the PD Debt Instruments contain provisions for calling meetings of PD Debt Instrument Holders to consider matters affecting their interests 87
generally. These provisions permit majorities of certain sizes to bind all PD Debt Instrument Holders, including PD Debt Instrument Holders who did not attend and vote
at the relevant meeting and PD Debt Instrument Holders who voted in a different manner than the majority did.
Can the Conditions of the PD Debt Instruments be amended? The Conditions of the PD Debt Instruments provide that the Issuer may, without the consent of the PD Debt Instrument Holders, amend the Conditions of the PD Debt Conditions of the PD Debt Instruments (Condition 16 - Modifications and waiver) beginning on page
Instruments and the Final Terms, in respect of any modification which is not materially prejudicial to the interests of the PD Debt Instrument Holders or any modification 87
which is of a formal, minor or technical nature or for the purpose of correcting a manifest error contained therein. PD Debt Instrument Holders may also sanction a
modification of the Conditions of the PD Debt Instruments by passing a resolution approved by a specified proportion of PD Debt Instrument Holders.
What will PD Debt Instrument Holders receive in a winding-up of the Issuer? If the Issuer becomes insolvent and is unable to pay its debts, an administrator or liquidator would be expected to make distributions to its creditors in accordance with N/A
a statutory order of priority. An investor's claim as a PD Debt Instrument Holder would be expected to rank after the claims of any holders of the Issuer's secured debt
or other creditors that are given preferential treatment by applicable laws of mandatory application relating to creditors, but ahead of any shareholder of the Issuer.
Simplified diagrams illustrating the expected ranking of the PD Debt Instruments compared to other creditors of the Issuer are set out below: Type of obligation Examples
of obligations/securities Higher ranking Secured debt Senior ranking secured obligations (such as secured senior loans) Liabilities preferred by law
Liabilities which the laws of Australia provide are to be paid out of MGL's assets in Australia in priority to liabilities in respect of PD Debt Instruments, such as
costs of any winding up and certain employee entitlements. The PD Debt Instruments Unsubordinated unsecured debt The PD Debt Instruments, other unsubordinated and
unsecured bonds and notes, trade and general creditors Subordinated unsecured debt Tier 2 capital instruments, subordinated notes and other unsecured subordinated debt
obligations ranking senior to preference shares Preference shares and other equally ranked instruments Additional Tier 1 Capital (as defined by APRA from time to time)
instruments (such as capital notes and convertible preference shares) and other obligations ranking senior only to ordinary shares Lower ranking Ordinary
shares MGL's ordinary shares
What will the proceeds be used for? The proceeds realised from the issuance of PD Debt Instruments under the Programme will be used by MGL for MGL's general corporate purposes. Section 15
(Use of Proceeds) on page 158
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