ASIC has announced the results of its recent review of "related party" compliance.
The campaign targeted eight areas of disclosure where the quality of information in related party documents sent to shareholders continues to be defective. These areas of disclosure
include:
- the valuation of the financial benefit;
- the disclosure of the total remuneration package of the related party;
- the description of the related party;
- the details of the financial benefit including reasons for giving the type and quantity of the benefit;
- the disclosure of the related party’s existing interests in the company;
- the disclosure of the dilution effect of the transaction on existing members’ interests;
- the disclosure of the trading history of the relevant equity, including highest, lowest and most recent closing price; and
- the disclosure of each director’s recommendation and interest in the outcome of related party transactions.
During the three-month period September 2004 to November 2004, ASIC reviewed a total of 223 notices of meeting and accompanying documents, including re-lodged notices of meeting. 58 notices of meeting were found to have common defects. As a result:
- 50 notices were withdrawn and subsequently re-lodged once the common defects had been rectified;
- five notices were withdrawn and not re-lodged;
- three required further regulatory action;
- one comment letter was issued; and
- in one case where the company had already sent the related party documents
to shareholders prior to the lapse of the statutory 14-day period, ASIC obtained an undertaking from the company that it would withdraw the relevant resolution from shareholder consideration.
