The Australian Securities Exchange
("ASX") has recently released its
findings of a review ("Review")
conducted by ASX Markets Supervision
("ASXMS") of disclosure of
directors' interest notices lodged by listed entities.
The Review was conducted over the period commencing 1 January
and ending on 31 March 2008 ("Review
The Review found that 13% of directors' notices
lodged during the Review Period breached the ASX requirement
for disclosure within five business days of the relevant change
occurring. A number of those notices also failed to meet the
requirements of the Corporations Act 2001 (Cth)
Section 205G(1) of the Act requires a director of a listed
public company to notify ASX of:
(a) his or her relevant interest in securities of that
company or a related body corporate; and
(b) contracts to which the director is a party or under
which the director is entitled to a benefit and that confer a
right to call for or deliver shares in, debentures of, or
interests in a managed investment scheme made available by,
the company or a related body corporate.
Under the Act, any change of a director's interest
referred to above must be given to the relevant market operator
within 14 days of the date of such change occurring. A breach
of section 205G is a strict liability offence and can result in
fines and/or (technically at least), jail time. These
requirements are separate to those imposed by the ASX Listing
Rules. However, if a listed company complies with the ASX
disclosure requirement, it is also not required to
give another notice to satisfy section 205G.
ASX Listing Rules
ASXMS also reviewed trading by directors during the period
between the end of a listed entity's financial period
and the release of its half-year or full-year results
– referred to as the "blackout" period.
Almost 800 trades by directors during "blackout"
periods were considered by ASXMS to be of potential market
concern. Trading by a director during a "blackout"
period may contravene the "insider trading"
provisions of the Act if that director is in possession of
undisclosed, price-sensitive information at the time of
acquiring or disposing of the relevant securities. In its media
release, ASX stated that it will refer serious matters arising
from its Review to ASIC for possible investigation and
Directors of publicly-listed companies should be aware of
the various disclosure notices that they must provide to ASX.
ASX Listing Rule 3.19A requires an entity to notify ASX of:
(a) the notifiable interests of a director of the entity
on the date that the entity is admitted to the official list
and on the date that a director is appointed, in the form of
Appendix 3X – notification required within 5
business days of appointment;
(b) any change to the notifiable interests of a director
of the entity, in the form of Appendix 3Y –
notification required within 5 business days after the
occurrence of the change; and
(c) the notifiable interests of a director of the entity
at the date that director ceases to be a director, in the
form of Appendix 3Z – notification required within
5 business days after ceasing to be a director.
ASX Listing Rule 3.19B provides that an entity must make
such arrangements as are necessary with its directors to ensure
that each of its directors discloses to the entity all the
information required by the entity to give ASX completed
Appendices 3X, 3Y and 3Z within the time period allowed by
Listing Rule 3.19A. Entities are also required to enforce such
arrangements with their directors.
ASIC Regulatory Guide
The release of ASX's findings coincides with the
issue, by ASIC, of Regulatory Guide 193 entitled
"Notification of directors' interests in
securities – listed companies"
("Guide"). The Guide provides a
summary of directors' obligations under section 205G of
the Act and ASIC's policy in relation to its
enforcement of that section. ASX's Review and
ASIC's Guide may be viewed via
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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