Melbourne Law School - Theses

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End date: 1998 × Start date: 1992 × Type: Coursework thesis × Subject: Australian Stock Exchange ×

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    The role and function of the ASX and its listing rules
    Kudnig, Martin ( 1992)
    In a joint submission to the Australian Stock Exchange Limited ("ASX") dated December 1989 (the "Joint Submission") the Law Institute of Victoria and the Law Council of Australia expressed the view that: "The ASX should be contained to its role of ensuring that the market is informed, efficient and fair, and not be allowed to effectively legislate on substantive issues of law outside this role."1 It was suggested in the Joint Submission that the ASX, through its listing rules, had over-extended its role so as to encroach on substantive company law matters which were more properly within the province of Parliament. 2 These criticisms have resulted in a considerable degree of public debate on the proper role of the ASX and the scope of its listing rules.3 In response to the Joint Submission and the public debate, a discussion paper was released by the ASX in October 1990 (the "Discussion Paper")4 in which the ASX expressed its views on these issues and invited submissions from interested members of the public. In its Discussion Paper, the ASX largely defended its perception of its current role in the business community and argued that the listing rules did not exceed their proper scope (although this view has since been refined). It was conceded by the ASX, however, that some of the concerns expressed in the Joint Submission relating to the drafting and adoption of listing rules had some validity".5 It was also conceded that some listing rules would be better contained in legislation. Both the Joint Submission and the Discussion Paper of the ASX will be examined in detail in this paper. Central to the argument concerning the proper scope of the ASX listing rules are sections 777 and 1114 of the Corporations Law (formerly sections 42 and 14 respectively of the Securities Industry Act 1980) which grant "statutory recognition" to the listing rules. On the view put forward in the Joint Submission, the listing rules do not have the clarity expected of legislation, which gives rise to uncertainty of their application in practice.6 Such uncertainty is increased, so it is said,7 by the fact that in the foreword to the listing rules, the ASX states that it looks to listed companies to comply with the "spirit' as well as the letter" of the listing rules. According to the Joint Submission, this gives rise to the undesirable possibility of action under the Corporations Law (formerly under Securities Industry Act 1980) to enforce the spirit of the listing rules.8