Directors reminded of share trading obligations
Wed 01 July 2009
Directors reminded of share trading obligations
Media & Communications: Media Release
The Australian Institute of Company Directors (AICD) has reminded directors of their responsibility to comply with company policies on share trading during ‘blackout’ periods, after new figures released showing a small number still contravening these policies.
However AICD welcomed the downward trend in the figures and in the overall proportion of trades by directors in ‘blackout’ periods.
AICD was responding to release today of the latest review by The Australian Securities Exchange (ASX) on securities trading by directors during the ‘blackout’ period between the close of a listed entity’s financial period and the announcement of its half -year or full-year results.
The review for the March quarter 2009 shows that only 0.8 per cent of all active on-market trades by directors were confirmed as contraventions of the trading policies of the companies concerned and where permission from the relevant chairman of the board had not been granted. The contraventions involved eight trades by six directors in the shares of six different entities.
This was down on the 1.1 per cent of trades in the previous September quarter 2008 ‘blackout’ period. It compares to 0.3 per cent in the March quarter last year, when five directors in five entities contravened trading policies.
The six directors who contravened the policies in the March quarter are a tiny proportion of the approximately 7,000 directors of publicly listed companies in Australia.
The ASX review also showed that 33 per cent of total active trades by directors in the quarter occurred during the ‘blackout’ period, involving 219 individual directors. This compared to 50.1 per cent in the previous September quarter 2008 period, involving 454 directors, and 42.7 per cent in the March quarter of last year.
However, of the trades by directors in the ‘blackout’ period in the March quarter, 97.7 per cent were found by the ASX to have been consistent with company trading policies or received board approval. The eight contraventions, amounting to 2.3 per cent of ‘blackout’ period trades, compared to 15 in the previous September quarter.
“AICD is encouraged by the downward trend in the trades confirmed as contraventions of company trading policies,” said AICD Chief Executive, John Colvin.
“However, a tiny number of directors are still failing to get the message that they can only trade when permitted by their company’s trading policy, or when approval is received from the board.”
“The contraventions are frustrating and disappointing for the vast majority of directors who are doing the right thing.”
“The issue of director share trading is central to maintaining the integrity of Australia’s financial markets. There is no excuse for directors not to adhere to good governance practices.”
AICD noted that while trading by directors in ‘blackout’ periods is not prohibited by the Corporations Law, outside those provisions relating to insider trading or market manipulation, or by ASX Listing Rules, it has the potential to create perceptions of misconduct.
However, it maintains that ‘blackout’ trading by directors should not automatically be regarded as insider trading.
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Media Contacts:
Steve Burrell, General Manager Communications and Public Affairs
(02) 8248 6627 or 0407 708 485
Juliet Chandler, Communications Advisor
(02) 8248 6624 or 0412 580 402
Australian Institute of Company Directors (AICD) provides education, information and advocacy for company directors Australia-wide, with offices in each state to cater for over 24,000 members. AICD members work in diverse corporations such as small-to-medium enterprises, the ASX Top 200 corporations, public sector organisations, not-for-profit companies, large private companies and smaller private family concerns.