Substantial holdings policy revised

AN updated policy on how to deal with substantial holdings has been released by the Australian Securities and Investments Commission.

The revised policy addresses issues including:

• Full, rather than minimal or technical disclosure;
• Net movements in substantial holdings;
• Time for giving a notice;
• Documents to accompany a notice; and
• Joint notices.

The policy reflects legislative amendments to Corporations Law from the Corporate Law Economic Reform Program Act and also incorporates additional explanation of section 671B of the Corporations Act using recent case law.

Under s671B of the substantial holding provisions, a person who becomes a 5 per cent holder, or changes their substantial holding by at least 1 per cent in a listed company or listed managed investment scheme, is required to lodge a notice disclosing details of the holding with ASIC, usually within two days.

Failure to comply with these obligations is an offence and may ultimately lead to the securities being vested in ASIC.