ASIC Corporations (Disclosure of Directors' Interests) Instrument 2016/881

Overview

The Australian Securities and Investments Commission (ASIC) has introduced two legislative instruments under the Corporations Act 2001 to streamline the disclosure obligations of directors of public companies listed on the Australian Securities Exchange (ASX). The ASIC Corporations (Disclosure of Directors’ Interests) Instrument 2016/881 aims to reduce the regulatory burden on these directors by exempting them from certain disclosure obligations when the companies comply with the ASX Listing Rules. This is intended to eliminate the need for dual disclosure, as the ASX Listing Rules already require equivalent disclosures. The ASIC Corporations (Repeal) Instrument 2016/882 repeals the existing ASIC Class Order [CO 01/1519], which will be superseded by the new instrument. These instruments were developed following a review of ASIC's policy and public consultation, and they are deemed necessary and fit-for-purpose, ensuring that they remain relevant and necessary. The legislative instruments have been found to be compatible with human rights, as they do not engage any applicable rights or freedoms.

Scope and Application

The ASIC Corporations (Disclosure of Directors’ Interests) Instrument 2016/881 and ASIC Corporations (Repeal) Instrument 2016/882 are legislative instruments made under the Corporations Act 2001 by the Australian Securities and Investments Commission (ASIC). The principal instrument, ASIC Corporations (Disclosure of Directors’ Interests) Instrument 2016/881, applies to directors of public companies listed on the financial market operated by the Australian Securities Exchange (ASX). These directors are exempt from the obligation to notify the relevant market operator of an interest in a security or contract if the company has already made equivalent disclosure to ASX in compliance with ASX Listing Rule 3.19A. The purpose of this instrument is to reduce the regulatory burden on these directors by eliminating the need for dual disclosure, as the information provided to ASX is already accessible to ASIC. The repeal instrument, ASIC Corporations (Repeal) Instrument 2016/882, discontinues the existing ASIC Class Order [CO 01/1519], which previously provided similar relief but included conditions that ASIC now considers unnecessary. These instruments have a Commonwealth jurisdictional reach and no specific exclusions are mentioned, though they apply only in the context of companies listed on ASX and their directors. The principal instrument extends or restricts application through subordinate instruments as necessary.

Key Provisions

The ASIC Corporations (Disclosure of Directors’ Interests) Instrument 2016/881 (principal instrument) and ASIC Corporations (Repeal) Instrument 2016/882 (repeal instrument) were made under the Corporations Act 2001 (the Act) by the Australian Securities and Investments Commission (ASIC). The principal instrument, under section 205G(6) of the Act, allows ASIC to exempt directors of public companies from the requirement to notify the relevant market operator of an interest in a security or contract if certain conditions are met. This is particularly relevant to directors of public companies listed on the Australian Securities Exchange (ASX), as they must comply with ASX Listing Rule 3.19A, which mandates equivalent disclosure to that required under the Act. The repeal instrument, on the other hand, removes the existing ASIC Class Order [CO 01/1519], which previously exempted directors from similar notification requirements under the Act. The principal instrument imposes specific obligations on directors of public companies listed on the ASX. These obligations include the exemption from the notification requirement under subsection 205G(1) of the Act if the director reasonably believes that the company has complied with ASX Listing Rule 3.19A. Furthermore, the instrument removes the requirement for directors to retain a substantially faithful hard copy of the notice given to ASX and eliminates the need to use ASX Online exclusively for lodging notices electronically. The repeal instrument discontinues the existing class order, thereby removing the previously applicable conditions. There are no specific offences or penalties outlined in the legislative instruments themselves, but non-compliance with the ASX Listing Rules or the provisions of the Act could potentially lead to civil or criminal consequences. The Act may impose penalties for failure to disclose interests in securities or contracts as required, including fines and imprisonment for serious breaches. These penalties are not detailed within the instruments but are defined elsewhere in the Corporations Act. The principal instrument aims to streamline the disclosure process for directors, thereby reducing the regulatory burden without compromising the integrity of market disclosures. The legislative instruments are designed to ensure that the regulatory framework remains effective and relevant. By removing redundant requirements and aligning the obligations of directors with the ASX Listing Rules, the instruments aim to improve compliance efficiency while maintaining high standards of market transparency. Directors of public companies listed on the ASX should be aware of these changes and ensure that their companies comply with both the Act and the ASX Listing Rules to avoid any potential regulatory issues.