Letter to the editor - Australian Financial Review, 25 March 2015

Delivery by email: edletters@afr.com.au

ASIC is not redefining the concepts of ‘association’ and ‘relevant interest’ (‘ASIC swings pendulum against investor activism’, AFR, 20 March 2015). Indeed, one of ASIC’s goals is to encourage investors engaging collectively to pursue good corporate governance.

Compliance issues under the takeover and substantial holding provisions may arise when investors take collective action in relation to an entity. ASIC is consulting on this issue and welcomes all views as part of the process, but wants to correct misconceptions regarding the intended effect of our proposed updated guidance.

While in some instances it can be clear whether conduct falls within or outside the scope of the law, due to the nature of concepts like ‘relevant agreement’ and ‘associate’, there can be uncertainty regarding their application to a range of conduct. The examples provided in our proposed guidance are illustrative only and individual circumstances of each case needs to be considered. Potential ASIC action over misconduct will depend on whether it appears conduct undermines takeover and substantial shareholding disclosure laws, rather than simply for promoting good corporate governance.

Existing laws do not prevent investors acting collectively in certain circumstances and ASIC’s proposed guidance is simply aimed at helping people understand their existing legal obligations.

John Price

Commissioner, Australian Securities and Investments Commission

Melbourne, Vic

The Australian Financial Review published an AFR-edited version of this letter on 25 March 2015.