Corporate 5 Minute Fix 10: ASX Compliance Update, Corporate Governance Principles, voting intention statements

03 Apr 2024
5 minutes

ASX Compliance Update

Lodgement of Appendices

In its February compliance update, ASX has advised the order that it would be releasing Appendix 4D, 4E, or 4F and associated documents and recommended market participants to follow the same order as follows:

  • Relevant Appendix and associated documents per Listing Rules.
  • Dividend/distribution online form (if applicable).
  • Other materials such as media releases and investor presentations.

Market participants should consider section 15 of ASX Listing Rule Guidance Note 14, for further information.

Listed entities can also request early release arrangements for financial reports relating to the reporting periods under Appendix 4D and 4E. Those requests must be made at least 24 hours prior to the intended release date via email to ASX Market Announcements.

ASX has advised that release under these arrangements will be on a best endeavours basis.

Corporate Governance principles consultation

In its March compliance update, the ASX Corporate Governance Council announced the release of consultation materials regarding the proposed fifth edition of its Corporate Governance Principles and Recommendations, hereafter referred to as the "Principles and Recommendations."

The consultation package provided by the Council comprises the Consultation Draft of the proposed Fifth Edition, a marked-up version contrasting it with the current Fourth Edition, and a Background Paper containing a series of consultation questions. ASX highlights the importance of participation from all listed entities in the consultation process. The recommended means of involvement is by completing the online questionnaire.

Submissions must be provided by Monday, 6 May 2024.

Adverse voting intention statements do not preclude scheme meeting

Despite general guidance set out in ASIC Guidance Note 23 – Shareholder intention statements, until recently no direct authority has existed for a circumstance where a company receives adverse voting intention statements from shareholders ahead of seeking to convene a scheme meeting to approve the scheme booklet for dispatch.

On 7 February 2024, the WA Supreme Court released its decision in Technology Metals Australia Ltd v Australian Vanadium Ltd [2024] WASC 26 where it determined that receipt of such statements is no reason to refuse to convene the scheme meeting.

In this case a scheme of arrangement was proposed by which members bound by the scheme would receive new fully paid ordinary shares in the acquiring company, Australian Vanadium Ltd (AVL). Prior to the first scheme hearing, ASX-listed Technology Metals Australia Ltd (TMT) received voting intention statements from 50 shareholders indicating an intention to vote against the proposed scheme in the absence of a superior proposal. The statements were largely from retail shareholders, as well as one substantial shareholder.

The question for the Court was whether the shareholders' statements barred orders convening the scheme meeting or permitting dispatch of the scheme booklet.

Key findings of the Court:

  • Adverse voting intention statements must not frustrate the intention of section 411 of the Corporations Act 2001 (Cth) (Act) that all shareholders be entitled to fully consider the proposed scheme based on the information required by section 412 of the Act.
  • The shareholders who provided the voting intention statements could change their position based on the scheme booklet once provided, as such it would be premature to refuse to order a scheme meeting.
  • Provision of the scheme booklet to shareholders is a requirement of the statutory process for the scheme, which must be adhered to.
  • Shareholders will have the opportunity to object to any alleged unfairness at the final court hearing.

The Court made its findings for the following reasons:

  • The statements preceded the scheme booklet and IER and were thus uninformed;
  • most, if not all, shareholders who made the statements were not required by ASIC Regulatory Guide 25 to adhere to their statements. This created material uncertainty as to whether those shareholders could vote other than in accordance with their statements without notice;
  • the intention of specific shareholders to vote adversely was disclosed in the scheme booklet and to ASIC by TMT (out of concern of collective action and impermissible association); and
  • the aggregate voting power of the shareholders who indicated they would vote adversely would not be sufficient to defeat the scheme.

ASIC Regulatory Guide 148 – Electronic access to information

On 19 February 2024, ASIC reissued Regulatory Guide 148: Platforms that are managed investment schemes and nominee and custody services. In addition to accounting for new legislative instruments, the reissued RG 148 clarifies the circumstances in which IDPS operators may provide investors with electronic access to information about transactions, holdings and value as an alternative to quarterly reports.

An investor must satisfy either one of the below options in order for an IDPS operator to provide the investors with electronic access to information about their holdings and transactions in lieu of giving quarterly reports:

  • Option 1 – Investor has agreed to receive information electronically
    • the investor has agreed not to be given a quarterly report;
    • the investor has agreed to obtain information electronically about transactions and holdings through the service; and
    • the IDPS operator has no reason to doubt can electronically access this information on a substantially continuous basis.
  • Option 2 – Investor has been given reasonable notice and has not opted out of receiving information electronically
    • the investor has received reasonable notice that they will be able to obtain information electronically about transactions and holdings through the service;
    • the IDPS operator has no reason to doubt can electronically access this information on a substantially continuous basis;
    • the investor has been provided with the ability to opt out of receiving information by electronic access; and
    • the investor has not opted out of receiving the information by electronic access.

RG 148 states that ASIC expects that all IDPS operators will "as a matter of good practice" provide a number of reminders to investors notifying them of the transition to electronic access and that they will no longer receive quarterly reports. Further, unless an investor expressly agrees to electronic access, the guide clarifies that an investor may revert to receiving quarterly reports at any time.

If electronic access is provided instead of quarterly reports, the following information must be accessible electronically for a period of at least one year up to a date no more than 48 hours (excluding hours on a day that is not a business day) before the time of access:

  • all transactions in the investor’s investments held through the platform;
  • the quantity and value of the investor’s investments held within the platform and the corresponding liabilities; and
  • the revenue and expenses of the investor in relation to the platform and the investor’s investments held in the platform.

The electronic information must also include the time at which the information is current.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.