This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.  

In this Edition, we provide an update on proposed Listing Rule amendments, ASIC guidance on the impending LIBOR transition, and a recent court decision on inconsistencies between a company’s constitution and shareholders’ agreement.


ASX releases consultation paper on proposed Listing Rule amendments. ASX has released a consultation paper for proposed amendments to the Listing Rules. While many of the proposed amendments are mechanical in nature to facilitate the introduction of various online forms, others are more substantive. Importantly, ASX proposes to amend the Listing Rules to introduce requirements for the cancellation or deferral of previously announced dividends, distributions or interest payments. This became a more common occurrence during the onset of the COVID-19 pandemic and caused considerable adminstration headaches and market integrity issues, particularly where dividends were cancelled after the “ex” date for the dividend had passed (meaning that the market price had “erroneously” discounted the value of the dividend).  The proposed amendments require that where an entity has announced it will make such payments, it must immediately notify ASX of an intention to cancel or defer those payments. Where the entity has already nominated a record date for those payments, it may only cancel or defer them if (1) it would be contrary to law to make the payment on the announced date (an example might include where the paying company faces an imminent solvency issue) or (2) the entity has given ASX notice of the change on the business day prior to the ex date specified in the relevant announcement. ASX is seeking public consultation on the suite of proposed changes until 24 December, with changes intended to come into effect in March 2021. See ASX’s compliance update and consultation paper.

ASIC guidance on LIBOR transition. On 30 November 2020, ASIC published Information Sheet 252: Managing conduct risk during LIBOR transition (INFO 252) on practical guidance that Australian entities can adopt to manage conduct risk during the London Interbank Offered Rate (LIBOR) transition. LIBOR is expected to cease after the end of 2021. ASIC notes that while the financial industry in Australia have made substantial changes to date, additional effort is required to ensure an orderly transition to new benchmark lending rates.  The guidance sets out regulatory expectations and clarifications on key transition issues with a focus on non-financial (conduct) risks.  See ASIC’s media release.

Court’s confirmation that acts done in accordance with company constitution are unaffected by provisions of shareholders’ agreements. In the case of Re Maleny Tricorp Hotel Pty Ltd [2020] NSWSC 1699, the Supreme Court of New South Wales considered the validity of resolutions passed relating to the removal and appointment of directors, where the appointment provisions of the company’s constitution and its shareholders’ agreement directly conflicted. The procedure in the constitution was followed and the Court was asked to rule on the validity of this approach. The Court held that a shareholders’ agreement does not affect the validity of acts done in accordance with the company’s constitution, and therefore the director appointment was valid. This ruling serves as a reminder to ensure consistency between the terms of any shareholders’ agreement with the company’s constitution.


ASIC exposure periods over the Christmas period. ASIC has reminded entities that the exposure periods which apply to prospectuses and other disclosure documents will be automatically extended from 7 days to 14 days for all documents lodged between 5pm on 17 December 2020 and 9am on 4 January 2020.

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