The ASX is proposing to proceed with most of its governance-related amendments to the Listing Rules, with some important changes and additional non-governance related amendments following public consultation in August 2013.  Listed companies should familiarise themselves with the proposed amendments to the Listing Rules (including the changes proposed in ASX’s recent supplementary consultation paper (assuming they are implemented)) prior to the amendments coming into effect on 1 July this year.

Most of proposed amendments to the Listing Rules and Guidance Note 9 on which the ASX consulted in August 2013 (see G+T Client Update in August 2013 for an outline of the original consultation package) were intended to complement and give effect to the reforms proposed by the ASX Corporate Governance Council in its separate consultation paper related to a third edition of its Corporate Governance Principles and Recommendations (also outlined in G+T Client Update in August 2013).

However, ASX also sought submissions on some other governance-related amendments.

Following consultation, ASX has issued a supplementary consultation paper Proposed Governance-Related Listing Rule Amendments.

ASX’s proposed changes to the amendments proposed in August 2013 include:

dropping the proposed new Listing Rule 3.19B (requiring the disclosure of each on-market purchase of securities made by the company on behalf of employees or directors or their related parties under an employee incentive scheme within 5 business days of the purchase) and replacing it with a new Listing Rule 4.10.22 (requiring a one-off annual disclosure in the annual report covering the whole of the reporting period).  If implemented, this change will only apply for financial years ended on or after 30 June 2015; and

rather than changing “associate” to “related party” in Listing Rules 10.14 and 10.16, including a reference to a new definition of “associate” in Listing Rule 19.12.  ASX is proposing to drop the proposal to deem a related party of a director or officer to be their associate and instead include a provision to the effect that a related party of a director or officer of the entity or of a child entity is taken to be an associate of the director or officer unless the contrary is established (together with a note that one way in which this may be established is for the relevant director or officer to give a statutory declaration to that effect).

ASX is also proposing some further non-governance related amendments in addition to those originally consulted upon in August 2013, including:

  • tidying up various references to “market price” and replacing them with a reference to “closing market price” or “volume weighted average market price”, as appropriate;
  • a new explanatory note to Listing Rule 7.2, Exception 2 to clarify that the exception only applies to the issue to an underwriter under an underwriting agreement of securities comprising the shortfall from a pro rata issue to holders of ordinary securities (and does not apply to any other issue of securities to the underwriter under an underwriting agreement);
  • a new explanatory note to Listing Rule 10.12, Exception 1 to clarify that the exception only applies to securities taken up as part of a pro rata issue (and does not apply to a person taking up all or part of the shortfall of a pro rata issue);
  • amending Listing Rule 10.17 to clarify the meaning of “directors’ fees” for the purpose of restrictions on the total aggregate fees payable to non-executive directors without shareholder approval; and
  • amending Listing Rule 14.2 to require a proxy form to give a security holder the ability to direct their proxy to abstain from voting on a resolution or to vote or abstain from voting on a resolution at the proxy’s discretion, and also to include a statement as to how the chair intends to vote undirected proxies.  In addition, it proposes removing the “chairman’s box” that currently appears in Listing Rule 14.2.3A and 14.2.3B (and which is often overlooked).

The amendments ASX proposed in August 2013 in relation to corporate governance statements and an Appendix 4G (which is intended to be a key as to where a listed entity’s various corporate governance disclosures can be found) remain unchanged.  ASX has indicated that it will release the proposed Appendix 4G later this month.  It is proposed that compliance with these amendments will only be mandatory in respect of financial years ending on or after 30 June 2015.

Comments on the above amendments are due by 28 March 2014 and all of the amendments are proposed to come into effect on 1 July 2014.

See also modified proposed amendments to the ASX Listing Rules and a mark-up of the changes from those originally proposed in August 2013.