ASX to strictly enforce lodgment deadline rules from 1 January 2023

In its Compliance Update (3 November 2022), the Australian Securities Exchange (ASX) announced that it will strictly enforce lodgement rules from 1 January 2023.

To avoid reputational damage associated with having trading in securities suspended, we recommend that all listed entities be mindful of the change in the ASX’s approach to late lodgements and suspensions. Listed entities should plan ahead as they will no longer be able to rely on weekends for more time to complete lodgements.

Under Listing Rule 17.5, the ASX will suspend the trading of securities of entities that fail to lodge the following documents on time:

Appendix 4D and half-year report (Listing Rule 4.2A)
Appendix 4E preliminary final report (Listing Rule 4.3A)
Change of balance date 12-month period (Listing Rule 4.4A)
Annual financial reports lodged with ASIC (Listing Rule 4.5)
Annual report (Listing Rule 4.7)
Quarterly cash flow reports (Listing Rule 4.7B)
Quarterly activity reports (Listing Rule 4.7C)
Investment entity’s net tangible asset backing (Listing Rule 4.12)
Quarterly reporting for mining producing entities, oil and gas producing entities, mining exploration entities, and oil and gas exploration entities (Listing Rule 5.1, 5.2, 5.3, 5.4 or 5.5).

If a Listing Rule requires something to be done by a day that is not a business day, Listing Rule 19.5 requires the thing to be done by the preceding business day. Up to now, the ASX has not suspended trading of an entity’s securities if it lodges within a reasonable time before the market opens on the next trading day. However, the ASX considers it important to keep the market informed in a timely manner and provide sufficient time for the market to consider reports lodged late. The ASX therefore noted in its Compliance Update that from 1 January 2023, it will be strictly enforcing the late lodgement rules.

Any periodic reports due from 1 January 2023 onwards must be lodged before the ASX market announcements office closes on the business day when the report is due. If they fail to do so, trading of its securities will be suspended from trading on the next trading day.

If an entity lodges after the market announcements office closes on the business day when the report is due, but before the market announcements office opens the next day (i.e. before the suspension is announced), the entity’s securities will be reinstated to quotation on the next trading day after the suspension is imposed. That is, the shares will be suspended from trading for at least one day.

The normal business hours for the ASX market announcements office is 8:30am to 7:30pm Sydney time (8:30pm during daylight saving time) on ASX trading days.

Example

Listed Exploration Entity has a 31 December year-end. It is a mining exploration entity so is not required to lodge an Appendix 4E preliminary final report with the ASX. However, Listing Rule 4.5 requires it to lodge its annual financial report with the ASX, which comprise the documents required to be lodged with ASIC under section 319 of the Corporations Act 2001, within three months of year-end, or by 31 March 2023.

Listed Exploration Entity is still finalising its annual report on Friday, 31 March 2023. It lodges the report with the ASX after the market closes, at 8pm on Friday evening 31 March 2023.

Applying the ASX’s new enforcement rules:

Listed Exploration Entity’s securities will be suspended from trading on Monday 3 April 2024
Listed Exploration Entity’s securities will be reinstated to quotation on Tuesday 4 April 2023.