Governance-Related ASX LR Amendments

May 1 2014

BOARDWORX BRIEFING | Governance Related Listing Rule Amendments

What you need to know…

ASX has proposed some modifications to governance-related Listing Rule amendments.  Most of these are intended to complement the 3rd edition of the Corporate Governance Principles and Recommendations.

Key Proposed Changes to the ASX Listing Rules

  • Governance Statement Disclosure

Companies will have the option to include their governance statement in their Annual Report or include the URL of the page on its website where the corporate governance statement can be found.

In addition, when an entity lodges its annual report with the ASX they must also complete an Appendix 4G which contains a key to where the various corporate governance disclosures for the entity can be found.  If the entity has decided to put its corporate governance statement on the website instead of in their annual report, they must include a copy of the statement when lodging the 4G.

  • Related party of a director taken to be an “associate”

ASX is proposing changing the definition of an “associate” to provide that a related party of a director is taken to an associate unless the contrary is established.

Note the administrative burden around ensuring this is complied with.

  • Changes to Proxy Forms

(a)         Inclusion on the Proxy Form, how the chairman of the meeting intends to vote undirected proxies if the chairman is appointed as a holder’s proxy.

(b)         Deletion of the requirement for the Chairman’s ‘tick the box’ – a sensible change as this is misunderstood by most security holders;

(c)          Inclusion on the Proxy Form of the ability for a proxy to abstain from voting or to vote or abstain on a resolution at the proxy’s discretion.

  • Disclosure of on-market purchases to satisfy equity incentive awards

ASX is proposing a new Listing Rule 4.10.22 requiring listed entities to disclose in its annual report information in relation to on-market purchases of securities during the reporting period under the terms of an employee incentive scheme or to satisfy the entitlements of holders of options or performance rights.   This rule is set to replace Listing Rule 3.19B and will require disclosure only once per year, rather than as they occur.

  • Clarification of pro-rata issue exceptions

ASX proposes to clarify exception 2 to Listing Rule 7.2, to make it clear that the exception only applies to issues of securities to an underwriter for the shortfall of a pro-rata issue (not to any other issue of securities to the underwriter).

What should you be doing?

  • These changes are foreshadowed to take effect for entities on or after 1 July 2014.
  • We will be watching for those rules which impact in particular, the governance reporting regime.
  • For general meetings, note the proposed changes in the Proxy Form requirements.
  • If you need assistance with this transition, please do not hesitate to contact us.