Company trading policy required for listed entities

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Background

On 19 July 2010, ASX released the details of the amendments to the Listing Rules and an associated Guidance Note to assist listed entities to comply with their obligations under the new rules.

Obligations on listed companies

The amended Listing Rules impose a number of obligations on listed companies relating to trading policies, including the following:

• a listed company must have a trading policy that conforms with the requirements of the listing rules;
• the listed company must give its trading policy to the company announcements office for release to the market (as well as at any time upon request by ASX);
• where a listed company makes a material change to its trading policy, the listed company must give the amended policy to the ASX company announcements office for release within 5 business days of the change taking effect; and
• where there is a change to a notifiable interest of a director of a listed company, the listed company must complete a ‘Change of Director’s Interest Notice’ form (Appendix 3Y) and provide that form to ASX no more than 5 business days after the change occurs.

Required content of trading policies

To comply with the new Listing Rules, a listed company’s trading policy must include:

• the fixed periods when the listed company’s key management personnel are prohibited from trading in the entity’s securities (Closed Periods);
• the restrictions on trading that apply to the listed company’s key management personnel;
• any trading which is not subject to the listed company’s trading policy;
• any exceptional circumstances in which the listed company’s key management personnel may be permitted to trade during a prohibited period with prior written clearance; and
• the procedures for obtaining prior written clearance for trading in the exceptional circumstances as set out above.

What constitutes a “material change”

As noted above, it is a requirement for a listed company to disclose any material change in its trading policy. The circumstances in which a change to a trading policy will be considered a material change include:

• changes to the listed company’s Closed Periods;
• changes with respect to the trading that is excluded from the operation of the listed company’s trading policy; and
• changes with respect to the exceptional circumstances in which the listed company’s key management personnel may be permitted to trade during a prohibited period.

Excluded trading

The changes to the Listing Rules contemplate that there may be trading situations that a listed company can appropriately exclude from the operation of its trading policy. Such exclusions are generally appropriate:

• where the trading does not result in a change in the beneficial interest of the securities;
• where the restricted person has no control or influence with respect to the trade decisions; or
• where the trading occurs under an offer to all or most of the security holders of the listed company.

The Guidance Note also provides a number of examples of particular trading scenarios that may be appropriately excluded from a listed company’s trading policy.

Exceptional circumstances

The changes to the Listing Rules also make provision for situations where trading which would ordinarily breach the trading policy of a listed entity is considered legitimate because of exceptional circumstances facing the restricted person (as long as the person is not in possession of inside information and has the prior written approval of the listed company).

These circumstances include:

• where a person is in severe financial hardship or has a pressing financial commitment that cannot be satisfied otherwise than by selling the relevant securities; or
• where a person is required by a court order, court enforceable undertakings or other overriding legal or regulatory requirement to transfer or sell the securities of the listed company.

To view the amendments and guidance note click here.

Contact Details

Brisbane

Philip Vickery
Partner
T:  +61 (0)7 3135 0632
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Melbourne

Michael Linehan
Partner
T:  +61 (0)3 9321 9807
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Sydney

David Walker
Partner
T:  +61 (0)2 8083 0446
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Darren Pereira
Partner
T:  +61 (0)2 8083 0487
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Disclaimer

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this publication is accurate at the date it is received or that it will continue to be accurate in the future. We are not responsible for the information of any source to which a link is provided or reference is made and exclude all liability in connection with use of these sources.