At the end of January 2015, ASX released revised guidance concerning listed companies’ share trading policies, following some well publicised shortcomings in the share trading practices of at least one notable Australian company.
ASX Listing Rule 12.9 requires that all listed entities have in place a share trading policy that at a minimum, includes the information referred to in ASX Listing Rule 12.12. The revised guidance note 27 has expanded the information that ASX recommends be included in a company’s share trading policy. We say “recommends” rather than “requires” because at least to date, ASX Listing Rule 12.12 has not been amended to require the additional detail specified in GN 27.
GN 27 now indicates that a company’s trading policy specifies:
- the periods during which share trading is closed, namely “black-out” periods
- what are the generally acceptable trading periods
- the company’s policy on derivative trading
- whether margin lending or other security financing arrangements are permitted
- the company’s policy on permissible trading in the securities of other entities
- the circumstances when approval to trade will be granted
- the monitoring and enforcing of the policy.
While it may not (yet) be mandatory for listed entities to adopt share trading policies in compliance with the revised GN 27, we recommend that boards review their trading policies in light of the new ASX guidance. Companies that adopt the new guidance and ensure that directors and key management personnel only trade in securities in compliance will be less likely to be exposed to criticism over share trading activities. Please bear in mind that any material changes by a company to its share trading policy must be advised to ASX and the market.