ASIC reviews collective action rules

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The corporate regulator is reviewing its guidance for institutional investors who are looking to engage with ASX-listed companies.

ASIC Consultation Paper 228 has been released as the 10-year 'sunset clause' approaches for Regulatory Guide 128 Collective action by institutional shareholders.

While ASIC said it recognises the importance of investor engagement in "maintaining good corporate governance", the regulator is also concerned about investors breaching the takeover and substantial holding provisions of the Corporations Act 2001.


The rationale behind the modifications is the changing face of investor engagement since 1998, said a statement by ASIC.

ASIC commissioner John Price said: “Effective investor engagement underpins good corporate governance and promotes confident and informed investors and fair, orderly and transparent markets.”

"ASIC recognises that it can be efficient and effective for the market for investors to work together when engaging with a listed entity.

“In our update we aim to provide guidance that facilitates investor engagement yet honours the spirit of takeover laws,” Mr Price said.

ASIC has proposed a series of changes to RG 128 in the CP 228 consultation paper.

These include updated guidance on how the takeovers and substantial holding notice provisions apply to collective action by investors, including illustrative examples of conduct which is unlikely or likely to trigger these provisions, and an overview of other legal and regulatory issues that can arise in relation to investor engagement.

“ASIC also proposes to discontinue the existing class order relief available to facilitate agreements between institutional investors about voting as it does not reflect the way in which institutional investors tend to engage with entities and has not been used for many years.”

Moreover, the proposed changes will mean the term “collective action” will refer broadly to a range of behaviour, including behaviour that is little more than investors being in contact with each other, the paper noted.



ASIC reviews collective action rules
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