With shareholder activism on the rise in Australia (and globally), ASIC’s new guidance provides some timely certainty for investors as to whether, in pursuing a common goal or agenda with other likeminded shareholders, they become “associates”. The new guidance will make it easier for investors to take collective action to improve the corporate governance of listed entities without contravening the substantial holding disclosure and takeover provisions under the Corporations Act 2001 (Cth)).
Following consultation in February (see G+T March 2015 CA Client Update), ASIC has released an updated Regulatory Guide 128 Collective action by investors to help investors take collective action to improve the corporate governance of listed entities. The updated guidance includes:
- illustrative examples of conduct which is unlikely or more likely to trigger the takeover and substantial holding provisions under the Corporations Act 2001 (Cth);
- an outline of ASIC's approach to enforcement of these provisions in the context of collective action by investors, which includes considering whether the conduct is control seeking rather than simply promoting good corporate governance; and
- an overview of some other legal and regulatory issues that can arise in relation to investor engagement ie the prohibition on insider trading, shadow directors, directors duties, misleading and deceptive conduct and handling of confidential information.
As part of the update, ASIC has also discontinued class order relief that facilitated voting agreements between institutional investors as it does not reflect the way institutional investors tend to engage with entities and has not been used for many years.
See ASIC media release dated 23 June 2015.
See also ASIC media release dated 17 February 2015 in relation to the February consultation,Consultation Paper 228 Collective action by investors: Update to RG 128 and Report 438 Responses to submissions on CP 228.