ASIC commercial operations director Debra Russell talks about ASIC's campaign to improve timely disclosure of share interests by listed company directors and explains how you can make sure you are complying with the Law.
If you are a director of a company listed on the Australian Stock Exchange, one of your obligations under the Corporations Law is to disclose interests you have in the company to the ASX. This requirement (under section 205G of the Law), together with the insider trading prohibition and continuous disclosure requirements, helps to maintain an informed market. During July and August, ASIC has again been monitoring disclosure by listed company directors in Victoria and New South Wales to make sure they are meeting their obligations. 1999 review results Last year's pilot program focused on companies in Victoria and South Australia. The review found 26 percent of s205G notifications were lodged later than they should have been and 75 directors were asked to explain why their notifications had been late. A further 13 directors lodged notifications which had been outstanding until we drew the matters to their attention.
Why review disclosure again this year? ASIC believes there is still considerable scope for improvement in disclosure by listed company directors. ASIC commissioner Jillian Segal explains: "This review is designed to support ASIC's and the ASX's program focusing on continuous disclosure for listed companies. The continuous disclosure regime is a key platform to ensure the integrity of the market. "Where we identify breaches by directors of their obligation to disclose trading, we will look to see if there is any associated failure to disclose price sensitive information or any insider trading," Segal says. "We will also check that directors of newly listed companies, including technology companies, are aware of and comply with their disclosure obligations. "In addition, we will monitor compliance by directors of established companies. Directors who are found to be non-complying for a second year are likely to be prosecuted."
More information ASIC has prepared an information sheet which helps company directors to comply with their disclosure obligations: see boxes "What the Law says" and "Compliance checklist" for excerpts.
You can get a copy of the full information sheet Notifying the ASX about directors' interests in company securities from www.asic.gov.au (under publications) or by contacting ASIC's Infoline on 1300 300 630.
What the Law says Under section 205G of the Corporations Law, every director of a listed company must notify the ASX about holdings and changes to relevant interests in securities of their company. When do you have a "relevant interest"? You have a relevant interest in a security if you are the holder of the security or if you have the power to control the voting or the disposal of the security. You may have a relevant interest in securities even where you do not directly or indirectly own the securities: see "Compliance checklist". Types of interests include:
(a) relevant interests in securities of the company or a related body corporate;
(i) to which the director is a party or under which the director is entitled to a benefit; and
(ii) that confer a right to call for or deliver shares in, debentures of, or interests in a collective investment scheme made available by the company or a related body corporate.
(By "collective investment scheme" ASIC understands s205G to mean a registered managed investment scheme.) What are your obligations? You must notify the ASX of your holdings, no matter how small, within 14 days of your appointment as a director or the company's listing on the ASX. Thereafter, you must notify the ASX within 14 days of any change to your holdings. If you have lodged a substantial shareholder notice that includes the matters required under s205G, then you need not lodge another notice under s205G. What happens if you fail to comply? You may face a late penalty if you lodge your notification outside the 14 day time limit. A breach of s205G carries a penalty of up to $1000 or imprisonment for three months or both.
* Are you a director of a company listed on the ASX?
* Do you hold securities in your company?
* Do you have the power to control the voting or the disposal of securities in your company? This may be the case even if the securities are held through a family trust or in the name of a spouse or children.
* Do you have direct or indirect control over 20 percent of the voting power in a company which holds securities in your company?
* Have you changed the interests you hold in your company? Check 4 If you answered yes to Check 1 and any of the questions in Checks 2 and 3, s205G applies to you. When notifying the ASX of your holdings or changes to holdings, we suggest you use the ASX form which is available from www.asx.com.au or by phoning 1300 300 279.
* If this is your first notification, include the date of your appointment as a director or the date of listing of the company (whichever is relevant).
* If you are notifying the ASX of a change to your interests, include the date of the last form lodged and the date your interest changed. * Set out the number and type of securities you hold.
* State whether you are the registered holder or beneficial owner of the securities. If you are not, explain the circumstances giving rise to your relevant interest. You can do this in the section of the ASX form headed "Circumstances giving rise to relevant interest".
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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