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Matters for Directors of a Newly Listed Company to Consider

1. Directors’ Duties & Responsibilities

Statutory responsibilities:

  • duty to act with care and diligence

  • business judgment rule (‘safe harbour’)

  • duty to act in good faith, in the best interests of the company, and for a proper purpose

  • duty to avoid improper use of position and information

  • duty to prevent the company trading while insolvent

  • duty to disclose material personal interests to other directors

  • Fiduciary duties:

  • ensure that you are not put in a position where your personal interests and your duties to the company are in conflict

  • ensure that you do not profit from your position (other than from director’s fees or other remuneration approved by the company/shareholders)

  • ensure that you preserve the confidentiality of company information

Directors’ protection:

  • Directors’ and Officers’ insurance

  • Deed of Access & Indemnity

  • Access to advisers

  • 2. ASX Listing Rules (some of the requirements) See: asx.com.au/regulation/rules/asx-listing-rules.htm LR 3.1 & 15: Continuous disclosure Important! Must have a ‘Continuous Disclosure’ policy – see the CGPRs in section 4 below

  • Be careful not to disclose information before it is announced to the ASX (‘differential disclosure’, e.g. analysts, media)

  • Late disclosure – confidentiality alone is not enough

  • On the spot fines from ASIC, actions by shareholders

  • Note LR 3.1A and 3.1B for exceptions, and the ability of ASX to require disclosure to prevent a “false market”

  • LR 3.19A: Disclosure of directors’ interests • Must have an agreement between the Directors and company about notification

  • Must notify ASX within 5 business days of a change or ASX will query and potential fines

  • Appendices 3X, 3Y and 3Z are used to notify the ASX of a director’s ‘notifiable interests’ LR 4.2A, 4.3A: Half-Year & Full Year Results

  • Ensure appropriate signoffs are obtained from Chief Executive Officer/Chief Financial Officer

  • Certification from Chairman of the Audit Committee

  • Annual Report must include a ‘corporate governance statement’ (LR 4.10.3) setting out the extent to which the company follows the CGPRs (section 4 below)

  • Timely lodgement of results with ASX (half-year financial report – within 75 days; full year preliminary final report - 2 months from end of accounting period)

  • Note the Corporations Act also requires that a half-year report be lodged with ASIC within 75 days (section 320), and an Annual Report must be lodged with ASIC within 3 months (section 319)

LR 7.1: New Shares

  • Be aware of restrictions upon issues of new shares (not to exceed 15%)

  • Ensure that Appendix 3B is lodged (LR 3.10.3) upon announcement of the proposed issue, and upon issue of securities (LR 3.10.5) together with cleansing notice

  • Ensure ASIC form 484 lodged within 28 days

  • LR 3.20: At least 7 business days’ notice of a “record date” required LR 4.7B: Quarterly Cash Flow Report for newly listed companies LR 4.10: Annual Report requirements (see also the Corporations Act) LR 4.12: Monthly Net Tangible Assets Report (within 14 days) LR 10, 11: Transactions with associates/significant transactions LR 12: On-going requirements

  • 3. ASIC Act and Corporations Act (some of the requirements)

  • Restrictions on issuing shares without a Product Disclosure Statement

  • The company must not engage in misleading or deceptive conduct

  • Insider trading prohibited – blackout periods

  • Obligation to cooperate with Auditors and answer questions truthfully

  • Lodging of relevant ASIC forms – any changes - observe time limits

4. ASX Corporate Governance Principles and Recommendations (“CGPRs”)

  • Principle 1: Lay solid foundations for management and oversight

  • Principle 2: Structure the Board to add value

  • Principle 3: Promote ethical and responsible decision-making

  • Principle 4: Safeguard integrity in financial reporting

  • Principle 5: Make timely and balanced disclosure

  • Principle 6: Respect the rights of shareholders

  • Principle 7: Recognise and manage risk

  • Principle 8: Remunerate fairly and responsibly

5. Board Composition & Meetings

  • Majority of independent Non-executives (CGPR 2.3)

  • Independent Chair

  • Appropriate mix of skills - qualifications and experience of Board members (CGPR 2.2 – Board Skills Matrix)

  • Sufficient number to address workload

  • Specialist committees appropriate to the organisation (see section 7 below)

  • Regular Board meetings

  • Accurate minutes and record-keeping

6. Annual General Meeting (LR 14)

  • Refer to CGPR 6 and the Corporations Act

  • 28 days’ notice plus mail period required – hold within 4 months of financial year en

7. Committee Structure (Non-executive Directors)

  • Nomination Committee (CGPR 2.1)

  • Audit Committee – Non-executive Chairman with financial qualifications (CGPR 4.1)

  • Risk Committee (CGPR 7.1)

  • Remuneration Committee (CGPR 8.1)

8. Some other good governance/sustainability matters

  • Ethical Guidelines, Code of Conduct (CGPR 3)

  • Diversity Policy (CGPR 1.5)

  • Compliance programmes for:

Competition and Consumer Act

Environment Protection Act

  • Occupational Health and Safety

  • Discrimination and Harassment o Taxation reporting

  • General legal compliance

  • Risk management plan

  • Communications with Stakeholders

  • Policies and procedures


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