The Government has introduced a bill to Parliament which, among other things, proposes significant changes to the disclosure regime affecting ASX-listed entities.
If the Bill is passed in its present form:
- investors in listed companies will need to disclose more about equity derivatives they hold that relate to the company – whether cash or physically settled. There is a new term for these – ‘deemed economic interest’;
- once a person’s combined ‘voting power’ and deemed economic interest in a listed company’s securities reaches 5%, they will be required to disclose these interests in a substantial holder notice, which will look very similar to the existing disclosure of shareholdings. This is different from the current regime where the law does not require disclosure of some derivatives (e.g. cash-settled equity swaps) in a substantial holder notice – although in some cases Takeovers Panel policy may require them to be disclosed in another form;
- directors of listed companies will be required to disclose their deemed economic interest in that company (in additional to their relevant interest); and
- listed entities and ASIC will have additional powers to seek disclosure with respect to deemed economic interests.
As at November 2025, the Bill is before the Senate and while there is no guarantee the Bill will be passed in its current form, it appears increasingly likely it will be passed towards the end of 2025 or early 2026. Once passed, the provisions discussed in this article will come into effect 12 months later.
This article provides AICD members with a high-level summary of the key proposed changes and takeaways for directors of ASX listed companies.
Summary of the key proposed changes
New concept of ‘deemed economic interest’
Many AICD members will be familiar with the concept of ‘relevant interest’ in the Corporations Act 2001 (Cth) (Corporations Act) which, in short, describes the extent to which a person exercises control or influence over the voting or disposal of securities in a listed entity.
The relevant interest concept is important to:
- the substantial holder disclosure regime. A person is required to disclose (i) the relevant interest of the person and their associates (‘voting power’) once it reaches a threshold of 5% (‘substantial holding’), (ii) any subsequent movements of 1% or more, and (iii) once they cease to have a substantial holding;
- directors of listed companies need to disclose their relevant interest in the securities of that company;
- the ‘20% takeover rule’ that prohibits a person from acquiring voting power of more than 20% in the securities of a listed entity (unless through a takeover or another exception); and
- the 90% post-takeover bid compulsory acquisition threshold.
The Bill retains this existing concept, but introduces a new ‘deemed economic interest’ concept which captures interests in the ‘bought’ position of equity derivates even if they are not relevant interests and do not relate to any particular underlying security holding of the ‘writer’ of that derivative.
Importantly, a person has a deemed economic interest under a derivative instrument whether the derivative is to be physically settled (where securities must be transferred on the specified date) or cash settled.
There are a number of extensions and exceptions that already apply in determining a person’s ‘relevant interests’.
The proposed changes effectively over-ride some of those exceptions from a disclosure perspective, and would require disclosure of:
- a person’s deemed economic interest in substantial holder notices (discussed below); and
- a director of a listed company to disclose their deemed economic interest in that company (in addition to their relevant interest) under section 205G (ongoing notification regime) and section 300 (disclosure in annual directors’ report).
A person’s deemed economic interest is not relevant to the 20% takeover rule or the 90% post-takeover bid compulsory acquisition threshold. Changes to substantial holder notices The Takeovers Panel in its Guidance Note 20 (GN 20) currently requires that certain derivative interests be disclosed by the parties to them. However, this does not capture all equity derivatives, where disclosure is also not required in substantial holder notices.
The Bill proposes to expand on GN 20 so that substantial holder notices must now disclose all interests arising under equity derivatives regardless of (i) whether the derivative is capable of being physically settled or cash settled, (ii) whether the counterparty has a relevant interest in the underlying securities, and (iii) whether the interests would have been required to be disclosed by GN 20.
While the Bill retains the existing disclosure thresholds (see above), a person’s deemed economic interests would now be counted in the calculation of their substantial holding (referred to as person’s ‘holding percentage’ in the Bill). The Bill would require disclosure across a range of technical sub-categories according to the nature of the interest. A person must also disclose any short positions they hold that have the effect of off-setting their deemed economic interest under the other instruments.
The Bill would also require the disclosure of changes in the type of deemed economic interest, even where an overall holding percentage does not move by more than 1%.
It is contemplated that the relevant substantial holder notices (i.e. Forms 603, 604 and 605) will be updated to accommodate this new disclosure regime. The Explanatory Memorandum to the Bill also suggests that ASIC may wish to implement a new ‘machine readable’ format to assist with its data collection.
There are no changes proposed to the deadlines for a person to lodge their substantial holder notices.
These remain (i) within 2 business days of the person becoming aware of the disclosure trigger (see above) generally, and (ii) by 9.30am on the next trading day during a takeover bid.
Other changes to tracing notices and ASIC’s powers
ASIC and listed entities can currently issue tracing notices to shareholders or someone named in a previous tracing notice. These tracing notices are an important tool for both ASIC and listed entities to understand the identity of the ultimate owners and controllers, and what types of interest they have.
The Bill expands the range of persons who can be the subject of a tracing notice to include persons suspected on reasonable grounds of having relevant interests in, or having given instructions about, acquiring/disposing of the interests in those securities. Listed entities must base their reasonable suspicion on information already disclosed under previous substantial holder notices or tracing notice responses. This limitation does not apply to ASIC.
The Bill also grants ASIC (but not listed entities) additional powers to issue tracing notices on similar grounds for deemed economic interests and ask for information beyond what a listed entity can request, including details of instructions given in relation to securities. Listed entities could request ASIC issue this type of notice in particular cases.
ASIC will also have the power (similar to its existing power under the ASIC Act) to make freezing orders, including where ASIC considers that a person has contravened the substantial holding or tracing notice provisions. Such orders may restrict the acquisition or disposal of derivative-based interests and/or relevant interests.
Key takeaways for directors of ASX listed companies
Broader requirements to disclose derivatives
If the proposed changes come into effect, we would expect a number of new substantial holder notices filed at that time which disclose existing deemed economic interests in ASX-listed entities.
It will be important for directors of listed companies to understand – initially and on an ongoing basis – the nature of the interests disclosed to assess, for example, whether or not the disclosure reveals an indication of an impending control transaction or some other corporate action. Directors should engage with their investor relations teams (and other advisers) to ensure they continue to be kept up to date on the nature of the various interests being accumulated in respect of their relevant companies.
Automated systems may need to be updated
Directors of entities that frequently acquire relevant interests in listed companies (or deal in equity derivatives) will wish to satisfy themselves that the entities have in place appropriate compliance processes to ensure they are fit for purpose under the new regime. For example, some entities use automated systems to prepare and lodge substantial holder notices which would need to be modified.
In particular, directors should satisfy themselves that the company puts in place processes which are:
- compatible with the new substantial holder notices (once these are released); and
- able to capture the required details relating to the deemed economic interests of the relevant entity.
If information disclosed is unclear, serve a tracing notice
While the usefulness of responses to tracing notices varies considerably, tracing notices are a useful tool available to listed companies.
As market participants grapple with the reporting requirements of the new regime, we expect that some well intending participants may inadvertently disclose inaccurate or confusing information in their substantial holding notices.
To the extent any information regarding the disclosed relevant interest or deemed economic interests in the company is, or appears, unclear or ambiguous, directors should ensure that their companies seek further clarification where necessary. This could first be done with an informal approach to the person making the disclosure and, where necessary, by issuing a formal tracing notice (and, if necessary, requesting ASIC to provide a tracing notice in respect of any deemed economic interests).
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