ASX Listing Rule amendments - Proposed “good fame and character” requirement for directors in listing applications

22 December 2011

Need to know:

  • From 1 January 2012, companies seeking a new listing will be required to satisfy the ASX that its directors or proposed directors are of “good fame and character”
  • Amendments to the Listing Rules will require applicants to provide ASX with relevant criminal history and bankruptcy checks
  • Companies with foreign directors need to ensure that the relevant checks are undertaken in places that the director has previously conducted business well in advance of the listing to prevent any delays in the company’s listing application

In late September 2011, ASX announced its intention to amend the Listing Rules to require a company seeking an ASX listing to show that its directors and proposed directors are of good fame and character.  These changes will take effect from 1 January 2012.

Under the proposed changes, applicants will be required to provide ASX with a police/CrimTrac criminal history check and Insolvency and Trustee Service Australia (ITSA) bankruptcy check for each director or proposed director, and a statutory declaration from each director or proposed director affirming, among other things, that they have not been the subject of relevant disciplinary or enforcement action by an exchange or securities market regulator.  In the case of a trust, this will apply to directors and proposed directors of the responsible entity.  ASX will have primary regard to these documents when determining whether a director is of good fame and character and may request additional information if required.

These checks are in addition to the Australian Securities and Investments Commission’s recently released Regulatory Guide 228 Prospectuses: Effective disclosure for retail investors.  This requires that a prospectus contain details of, among other things, the directors’ criminal convictions, any declarations of contravention made against a director under the Corporations Act 2001 (Cth), and any disciplinary action within Australia or other jurisdictions.

Practical impact

In addition to companies seeking new listings on or after 1 January 2012, companies seeking re-admission to the official list after a demerger or other transaction involving a change in the nature or scale of the company’s activities (and are required to re-comply with the Listing Rules in relation to admission and quotation) will also be required to comply with the new requirements.

The practical impact of these changes on existing companies, particularly in relation to the appointment of new directors, is discussed further in our article entitled “Implications for foreign directors complying with the proposed ‘good fame and character’ requirement” which will be published shortly.  The procedure, costs and timing of obtaining the relevant checks are also discussed in that article.

Importantly, companies with foreign directors will be required to obtain the overseas equivalent of both the criminal history check and ITSA bankruptcy check. As it can take some time to obtain the relevant checks, companies must ensure that they obtain the checks well in advance to ensure that there are no delays in their listing applications.

Further guidance from ASX is expected to be released shortly in a revised Guidance Note 1 Applying for Admission and Quotation and Guidance Note 4 Foreign Entities.

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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