Notifying ASX about directors interests in company securities
The Corporations Act 2001 (the Corporations Act) requires every director of a listed company to notify the Australian Securities Exchange (ASX) about holdings and changes to relevant interests in securities of your company.
When do you have 'a relevant interest'?
The basic rule is that you have a relevant interest in a security if you are the holder of the security or if you have the power to control the voting or the disposal of the security. You may have a relevant interest in securities even where you do not directly or indirectly own the securities. A family trust may own the securities. Alternatively your spouse or children may be the registered holder of the securities. Or the securities may be held by a company in respect of which you have direct or indirect control over 20% of the voting power.
(Further details about the types of interest which attract s205G are set out at the end of this Information Sheet.)
Is there any minimum number?
No. Section 205G requires you to notify the ASX about any of your holdings and any changes to your holdings, no matter how small. This section of the Corporations Act is different from the substantial shareholding provisions and covers a wider variety of securities. However, if you are a substantial shareholder, and you have lodged a substantial shareholder notice that includes the matters required under s205G, then you need not lodge another notice under s205G.
How soon do you have to notify the ASX?
Within 14 days. You must notify your interest within 14 days of appointment or listing of the company (whichever is relevant) and thereafter within 14 days of any change.
Who is responsible for notifying the ASX?
The Corporations Act makes the director personally responsible, not the company secretary. The company secretary may organise the preparation and lodgment of s205G notifications, but this works only if directors provide the company secretary with timely and accurate information. The 14 day time limit means that you may face a penalty if you are late. Responding only to intermittent requests that you advise any changes in your interests will almost certainly make some s205G notifications late.
How do you notify the ASX?
The ASX has a form that we encourage you to use, although there is no prescribed format under the Corporations Act. You can use the ASX form for your first notification or for a change of interests.
What exactly must you do in your notification?
In your first notification, provide the date of your appointment as a director or the date of listing of the company (whichever is relevant). In the case of a subsequent notification, provide the date of the last form lodged and the date your interest changed.
Set out the number and type of securities you hold. State whether you are the registered holder or beneficial owner of the securities. If you are not, explain the circumstances giving rise to your relevant interest. You can do this in the section of the ASX form headed 'Circumstances giving rise to relevant interest'.
What if you do not notify the ASX?
Section 205G is an important section which, together with the insider trading prohibition and the continuous disclosure requirements, helps to maintain an informed market. A breach of s205G is an offence that carries a penalty of up to $1700 or imprisonment for 3 months or both.
Which interests must be notified
This is how s205G describes the types of interests that must be notified:
- relevant interests in securities of the company or a related body corporate;
- to which the director is a party or under which the director is entitled to a benefit; and
- that confer a right to call for or deliver shares in, debentures of, or interests in a managed investment scheme made available by, the company or a related body corporate.