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Corporate Advisory and Governance Alert: ASX requires company directors to be of “good fame and character” - 12 Jan 2012

Those considering listing an entity on the ASX should be aware of a new rule that means the actions they undertake now may impact on any future listing.

Under a new requirement recently introduced by the ASX, directors of an entity proposing to list on the Australian Securities Exchange must now prove that they are of "good fame and character".

The requirement, which has been added to the official Listing Rules, supports the directors' duties of acting in good faith and for the proper purposes of the company, and aims to ensure integrity in the market.

Here, partner Michael Hansel and associate Sharon Robson discuss the new requirement and outline the documents that applicants will now need to provide.

Key points

  • Effective 1 January 2012, those applying to list an entity on the ASX will need to supply a number of documents to prove that the proposed directors are of "good fame and character" at the date of listing. Given it may take some time to compile these documents, applicants are advised to gather this material early on in their preparations.
  • The requirement for directors to be of good fame and character means that the actions potential directors undertake now may have a bearing on any future listings in which they are involved.

Documentation to be provided to the ASX

In order to satisfy ASX that the directors or proposed directors of an entity are of good fame and character, applicants will need to provide a copy of the following documents:

  • A national criminal history check from a Federal, State or Territory police service or CrimTrac broker (or its overseas equivalent).
  • An Insolvency and Trustee Service Australia bankruptcy check (or its overseas equivalent).
  • A completed statutory declaration affirming that the director:
    • has not been the subject of criminal or civil penalty proceedings or other enforcement action by a government agency in which he or she was found to have engaged in behaviour involving fraud, dishonesty, misrepresentation, concealment of material facts or breach of duty;
    • has not been refused membership of, or had their membership suspended or cancelled by, any professional body on the grounds that he or she has engaged in behaviour involving fraud, dishonesty, misrepresentation, concealment of material facts or breach of duty;
    • has not been the subject of, and has not been a director of any listed entity that was the subject of, any disciplinary action (including any censure, monetary penalty or banning order) by a securities exchange or other authority responsible for regulating securities markets for failing to comply with his or her obligations as a director or obligations applicable to that entity; and
    • is not aware of any pending or threatened investigation or enquiry by a government agency, professional body, securities exchange or other authority responsible for regulating securities markets that could lead to proceedings or action of the type described above. If the director is not able to give such confirmation, they will need to provide a statement to that effect and a detailed explanation of the circumstances involved.
  • Any other information that might be requested by ASX.