ASX releases compliance update with practical guidance on meeting materials

ASX recently published a Listed@ASX Compliance Update with a focus on observations and practical guidance for listed entities when preparing notices of meetings and other meeting materials. This guidance supplements ASX’s previously published observations from the 2023 AGM season.

In this article, we unpack some of the key guidance provided by ASX across both updates.

Waivers, review and timing

Meeting materials that contain an approval under the Listing Rules are required to be provided (in draft) to ASX for its review, with ASX generally requiring five business days to complete its review. Relevantly:

• ASX will not commence its review until all relevant materials have been provided – including the proxy form or voting card, any materials to be provided to shareholders (such as an independent expert’s report) and any constitutional amendments; and
• the five business day timeframe does not include the time required to obtain any waivers needed in connection with the meeting – with ASX generally requiring 10 business days for standard waivers and 20 business days for non-standard waivers.

ASX has flagged that, because waivers from meeting-related requirements are often conditional on additional disclosure being made in the notice of meeting, if an entity finalises its meeting materials prior to any required waivers being granted, the entity risks being unable to comply with the conditions of the waiver (subject to making supplementary disclosure, discussed below).

Issuing securities

Resolutions seeking approval for an issue of securities (e.g. under Listing Rule 7.1 or 7.4) generally require the persons to whom the securities were or are to be issued to be disclosed, or the basis upon which those persons were or will be identified.

Where the identity of the relevant persons is material to investors, ASX considers that their identity should be specifically disclosed (rather than identifying them by reference to a class of persons) – this will be the case particularly where the person is (or is an associate of) a related party, a member of the key management personnel, a substantial holder or an advisor, and they are being issued more than 1 per cent of the current issued capital (see Guidance Note 21).

Additional guidance on securities-related resolutions include:

• employee incentive schemes: an approval for an employee incentive scheme (as an exception to the 15 per cent placement limit under Listing Rule 7.1) requires the maximum number of securities proposed to be issued under the scheme to be disclosed. This must be a specified maximum number and cannot be a floating cap (e.g. a percentage of the issued capital from time to time).
• agreements to issue securities: the time at which an agreement to issue securities is tested for the purposes of calculating the 15 per cent placement capacity under Listing Rule 7.1 is the time the agreement is entered into. At that time, the entity must either have capacity to issue the securities, or the agreement must be conditional upon shareholder approval being obtained.
• where the issue is conditional upon shareholder approval, but the approval is not obtained, the securities cannot be issued (i.e. the entity cannot subsequently rely on its placement capacity to issue the securities).

Supplementary disclosure, short notice and new items

Where there is a material change to information included in a notice of meeting, or materially new information arises after dispatch of the meeting materials, supplementary disclosure may be required. Both ASX and ASIC generally consider that shareholders should receive any supplementary information at least 10 days before the meeting – with anything less requiring either an adjournment or a new meeting to be called.

If, after dispatch of the meeting materials, an additional resolution under the Listing Rules is proposed (such that less than 28 days’ notice of the resolution is given), ASX will require that the entity provides it with satisfactory evidence that the new resolution will be legally valid if it is passed. At a minimum, this will require the entity to obtain advice from suitably qualified external legal advisors.

Other matters

• Listing Rule 14.1A requires that the meeting materials for a resolution under the Listing Rules includes a summary of the relevant Listing Rule, and the consequences if the resolution is passed or not passed.
• Where the Listing Rules require information to be disclosed in connection with a resolution, ASX’s preference is that the information is set out in a separate, clearly identified section and follows the same order as the Listing Rule itself.
• Where a voting exclusion statement is required, it must be to the same effect as the statement set out in Listing Rule 14.11. If an entity does not use the exact wording provided, it must be able to demonstrate that the wording used has the same effect.
• When preparing meeting materials, entities should have regard to relevant ASX guidance – including Guidance Note 21 (Listing Rules 7.1 – 7.5), Guidance Note 24 (Listing Rule 10.1), Guidance Note 25 (Listing Rules 10.11 – 10.16) and Guidance Note 35 (general guidance).

Looking forward

The Federal Government recently released the final report into the statutory review of the meetings and documents amendments. The review found that some stakeholders continue to have concerns that virtual-only meetings might diminish the level and effectiveness of communication between management and members, and recommended that virtual-only meetings for listed entities should continue to be allowed only if expressly permitted by the entity’s constitution.

The Government is considering its response to the recommendations – although we expect that the recommendations will generally be followed.

For assistance with meeting-related matters, including the use of hybrid or virtual-only meeting technology, contact a member of our Board Advisory & Governance team.