Directors warned on obligations
Company directors who take out margin loans to buy shares in their own companies have been warned of their obligations towards transparency by both the Australian Securities and Investments Commission (ASIC) and the Australian Securities Exchange.
In a joint statement, the two regulatory bodies pointed out the disclosure requirements for listed entities and said that directors had a duty under the Corporations Act to disclose to the company material personal interests on a matter relating to the company.
“Accordingly, ASIC would expect all directors to have provided the company with all relevant information when a margin loan is entered into over securities in the company,” the statement said.
The statement by the regulators has come in the wake of reports that directors in a number of companies, including ABC Leaning Centres, have faced margin calls relating to shares purchased in their own companies.
ASIC and the ASX said they had decided to cooperate to produce a guidance note to listed entities to help companies meet their disclosure obligations.
The two regulators said they would work together to monitor disclosures and would take enforcement action where necessary to ensure the market was fully informed.
AUTHOR
Mike Taylor
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