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March 2018 Corporate Advisory Update: Recent amendments to ASX Guidance Notes
On 9 March 2018, ASX amended a number of its Guidance Notes.
Changes to ASX Guidance Note 1 Applying for Admission – ASX Listings (see here for tracked version showing the changes) include:
- additional examples in Section 3.8 of what might constitute “artificial” means of achieving spread;
- a note that ASX may require evidence to verify that an entity has achieved minimum spread without using artificial means, which may include providing (at the entity’s cost), a report from an identity verification service confirming the number of applications received from persons whose identity has been able to be verified; and
- clarification on meeting the “good fame and character” requirements, including a new requirement that ASX may require good fame and character checks from persons who are not currently, or proposed to be, directors of the entity but who are likely to be involved in its management; and
- clarification on what is acceptable for Australian and foreign criminal checks.
Changes to Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B (see here for tracked version showing the changes) include:
- additional guidance in Section 4.15 on ASX’s disclosure expectations for market-sensitive contracts. In ASX Compliance Update 02/18, ASX has also reminded entities that disclosures about customer contracts fall short of the required standard will result in suspension and correction of any inadequate or misleading disclosures, as well as referral to ASIC for consideration of regulatory action;
- removing a reference in Section 4.20 to disclosing the impact of material contracts on revenue, costs or profits;
- expanding the guidance in Section 5.10 to confirm that continuous disclosure obligations apply to an entity in financial difficulty but also address the new insolvent trading safe harbour for directors in s588GA of the Corporations Act 2001 (Cth) which came into effect from 19 September 2017. The amendments to GN 8 confirm that:
- section 588GA is a conditional carve out from a director’s potential liability for insolvent trading that does not affect a listed company's continuous disclosure obligations or reduce the entity’s obligation to disclose the extent of its financial difficulties; and
- the fact that an entity’s directors are relying on the insolvent trading safe harbour to develop a course of action that may lead to a better outcome for the entity other than an insolvent administration, in and of itself, is not something ASX would generally expect an entity to disclose under Listing Rule 3.1; and
- clarifying aspects of example D in Annexure A;
Changes to Guidance Note 12 Significant Changes to Activities (see here for a tracked version showing the changes) include:
- reflecting the change in policy for back door listings requiring all directors or proposed directors to provide evidence of their good fame and character, including existing directors who have been elected by shareholders to the board; and
- clarifying the accounts that need to be disclosed in an announcement under Annexure A to GN 12.
Guidance Note 16 Trading Halts and Voluntary Suspensions has been amended to reflect changes to section 5.10 of GN 8 outlined above (see here for a tracked version showing the changes).