The Australian Securities and Investments Commission (ASIC) today announced that it had revised its practice on releasing information provided to it in response to beneficial tracing notices.

ASIC can issue notices to obtain information about the beneficial, or ultimate, owner of shares in a listed company. ASIC may issue a beneficial tracing notice on request, for example, by a shareholder in a company.

ASIC will now generally provide information received in response to a beneficial tracing notice to the company. ASIC will not disclose the identity of the person who requested ASIC to issue the beneficial tracing notice.

The revised practice reflects legislative amendments to the Corporations Act 2001 (the Act) arising from the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004.

ASIC’s Executive Director of Regulation, Mr Malcolm Rodgers said the changes will make information about the beneficial owner of shares available to the wider market.

‘Under these amendments a listed company must maintain a public register of beneficial tracing information that it receives’, Mr Rodgers said.

‘Information obtained by ASIC, using its powers, will be entered into the new register’, Mr Rodgers said.

A company will be required to include in the register information that ASIC provides to it within two business days after the day on which it receives the information. The company is not required to include in the register any analysis of the information. Nor is the company required to reformat the information within a register entry.

However, searchers of the register must be able to locate particular entries. The company must ensure that separate entries are able to be distinguished and are logically organised (e.g. in order of receipt). For example, the company may maintain an index or search function that identifies separate entries by their date and by the persons to whom they relate.

Background

Under s672A of the Act, ASIC or a listed company can issue a beneficial tracing notice requiring a member of the company to disclose details about persons who have a beneficial interest in voting shares held by the member. ASIC or the company can serve a further notice on a person named in a response to a previous notice.

A person can request ASIC to issue a beneficial tracing notice to one or more holders of securities of a company. ASIC must exercise its power if requested by a shareholder, unless it would be unreasonable to do so. ASIC’s policy regarding the exercise of its power to issue a notice is set out in Policy Statement 86 Beneficial ownership notices.

Section 672DA of the Act requires a listed company to maintain a register of information regarding beneficial interests in its voting shares that it receives after 1 January 2005. This obligation applies whether the information is received in response to a beneficial tracing notice issued by the company or by ASIC.

Where ASIC issues a beneficial tracing notice, paragraph 672C(a) of the Act permits ASIC to pass to the company information that it receives in response.