ASX Listing Rule amendments - How the ASX’s new “good fame and character” requirement applies to foreign directors

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22 December 2011 | By Stephanie Daveson (Partner)

Need to know:

  • From 1 January 2012, companies seeking a new listing will be required to provide the ASX with criminal and bankruptcy checks to satisfy the ASX’s proposed “good fame and character” requirement.
  • This will apply to foreign directors and directors who have worked overseas; they will be required to obtain the overseas equivalent of these checks.
  • The ASX believes there is an ongoing obligation on Boards of listed companies to carry out these searches for all new directors.

In a recent article, we explained that amendments to the Listing Rules will require companies seeking a new listing to obtain relevant criminal and bankruptcy checks to satisfy ASX’s new “good fame and character” requirement.

Implications for foreign directors and directors who have worked overseas

The Rule will require foreign directors and directors who have worked overseas to obtain the overseas equivalent of a criminal history check and ITSA bankruptcy check to satisfy the “good fame and character” requirement.

While the new Rule will not apply to directors appointed following admission, ASX is of the view that prior to appointing a new director, existing directors will need to satisfy themselves that the new director is of good fame and character.  To do this, the board of listed companies will need to carry out the equivalent searches themselves.

Costs of complying with the “good fame and character” requirement

In Australia, the time that it will take to obtain the relevant criminal history and bankruptcy checks will typically be between fifteen to thirty days for a criminal history check and instantaneous for an Insolvency and Trustee Service Australia (ITSA) bankruptcy check using online sources.

The processing time for obtaining a foreign criminal history or bankruptcy check from a particular country will depend on various factors including whether there is a centralised database for the information, the need for translation, time differences, availability of the information that must be provided to the relevant authority and whether the information is being requested locally or outside of the relevant country.

The following table gives an indication of the expected processing times in various jurisdictions in which foreign directors of Australian companies commonly reside.[1]

Jurisdiction

Criminal Record

Insolvency Record

China

Checks are available.

No publicly available information on the expected processing times in the various provinces, district and cities.

Not available

European Union

Currently 1 to 30 working days depending on the EU country.

From April 2012 a uniform register called the “European Criminal Records Information System” will be available.

Instantaneous.

Japan

2 weeks.

2 working days (individual) or 3 working days (company).

South Korea

1 week.

5 -10 working days.

United Kingdom

2 or 10 working days depending on payment type.

Instantaneous.

United States

Up to 12 weeks.

1 to 2 working days.

The above times are indicative only.  While the processing time in several jurisdictions is relatively short and in some cases instantaneous, companies should obtain the checks well in advance to allow for any potential delays arising from the factors mentioned above.

In countries in which there is no bankruptcy register (eg China), the ASX (and the Board) will be in a position to rely on a declaration from the director to that effect.

The ASX has released proposed revised versions of Guidance Note 1 Applying for Admission – ASX Listings and Guidance Note 4 Foreign Entities listing on ASX.  These revised Guidance Notes have recently undergone public consultation and are expected to be officially released shortly.


[1] The information in the table is based on publicly available information.

This article originally appeared in Corrs' ECM Newsletter, which provides the latest insights and trends for the leading edge of capital markets. Click here to subscribe to this publication.

The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.


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Contacts

Stephanie Daveson

Partner. Brisbane
+ 61 7 3228 9493

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