Amendments to the Austraclear Regulations and Austraclear Regulations Procedures, Determinations and Practice Notes – Effective 1 July 2021

Austraclear is pleased to advise that a number of changes have been made to the Austraclear Regulations (the “Regulations”) and the Austraclear Procedures, Determinations and Practice Notes (the “Procedures”), to become effective 1 July 2021:

Improved process for changes to the terms of Deposited Non-Paper Securities

Austraclear has amended the Regulations and Procedures to introduce an improved, operationally efficient process for issuers of non-paper securities deposited in the Austraclear system (Deposited Non-Paper Securities) to make changes to the terms of those Deposited Non-Paper Securities.

From time to time, issuers of Deposited Non-Paper Securities may want to change the terms of those securities, or make amendments to the constituent documents of those securities. In almost all circumstances, this requires approval from the legal holders of those securities. Currently, Austraclear (in its capacity as legal and registered holder of the relevant Deposited Non-Paper Securities) must vote on any proposed changes to those securities by way of execution of a circulating resolution or proxy form (noting that any votes cast must be in accordance with instructions given by the “Owners” of those Securities for the purposes of the Regulations).

The amendments will introduce into the Regulations a prescribed process to be followed by an issuer of Deposited Non-Paper Securities in the event that the issuer wants to change the terms of those securities, amend the constituent documents, or make any other change in respect of those securities that requires the approval of Austraclear in its capacity as the legal holder of those securities.

This new process will allow issuers to vote and execute resolutions or proxy forms on behalf of Austraclear, in accordance with instructions that the issuers obtain directly from the relevant Austraclear Participants that are the Owners of the Securities.

The key features of this procedure are summarised as follows:

- where the proposed change will result in a requirement for one or more  amendments to be made to the information reflected in the System in respect of the Securities:

•  the issuer is required to notify Austraclear of the proposed change at least 5 business days prior to the change using a prescribed form, in order for Austraclear to identify and address any operational considerations (see Regulation 8.6.1(a) and associated Procedure);
• Austraclear will grant a power of attorney to the issuer to execute any resolution or proxy form on behalf of Austraclear in accordance with voting instructions obtained by the issuer directly from the relevant Austraclear Participants that are the Owners of those securities (see Regulation 8.8);
• the issuer may appoint its relevant issuer’s representative as a delegate to perform any act able to be performed by the issuer under the abovementioned power of attorney (see Regulation 8.9); and
• in the event that the change is approved by the Owners, the issuer must also notify Austraclear of the details of the change within 5 business days of the change coming into effect, using a prescribed form (see Regulation 8.6.1(b) and the associated Procedure).

- where the proposed change will not result in a requirement for one or more amendments to be made to the information reflected in the System in respect of the Securities:

• the issuer is not required to notify Austraclear prior to or following the change;
• Austraclear will grant a power of attorney to the issuer to execute any resolution or proxy form on behalf of Austraclear in accordance with voting instructions obtained by the issuer directly from the relevant Austraclear Participants that are the Owners of those securities (see Regulation 8.8); and
• the issuer may appoint its relevant issuer’s representative as a delegate to perform any act able to be performed by the issuer under the abovementioned power of attorney (see Regulation 8.9).

The amended Regulations will expressly require under Regulation 8.7 that any issuer that proposes to make an amendment to the terms of any Deposited Non-Paper Securities must follow all applicable consent and voting procedures set out in the relevant constituting documents of those securities.

In addition, the proposed rule amendments introduce a process whereby issuers of Deposited Non-Paper Securities are to notify Austraclear using a prescribed form in the event that:

• there has been or will be a change to the identity of the issuer’s representative appointed in respect of the issuer of those securities (see Regulation 8.6.1(c)); or
• the issuer becomes aware of any erroneous information reflected in the Austraclear system with respect to those securities (see Regulation 8.6.2).

Removal of Electronic Conveyancing Rules

The “Electronic Conveyancing Settlement Facility” rules (the “EC Rules”) were introduced into the Regulations in the 1990’s and were intended to provide a framework for Austraclear to offer an e-conveyancing service to the market. As Austraclear does not currently offer an e-conveyancing service to the market, Austraclear has amended the Regulations and Procedures to remove the EC Rules.

Clarifying the application of the Procedures in relation to the payment of interest

The final change provides for clarity on the application of the Procedures relating to the payment of interest due from an Owner of a Non-Paper Security to an issuer or its paying agent in the event that interest rates are negative.

Procedures 11.0.03 and 11.1 currently contemplate that any payment of interest due from an Owner of a Non-Paper Security to an issuer or its Paying Agent will be effected through the Austraclear system where an instruction is received to do so from the relevant issuer, Paying Agent or Owner. However, the existing Regulations do not contemplate the payment of interest due from an Owner.

Austraclear has amended Regulations 11.0.03 and 11.1 (and added explanatory notes) to include a link to the existing Procedures to clarify the circumstances in which the existing Procedures would apply.

What do I need to do by when?

When proposing to make changes to the terms of Deposited Non-Paper Securities, issuers and their representatives must follow the prescribed process set out in the Regulations and Procedures.

All prescribed forms which will be required to be provided to Austraclear from 1 July 2021, in accordance with the above Regulations, are available to view and download on ASX Online at the following link: 

https://asxonline.com/content/asxonline/public/documents/asx-clearing-forms/asx-austraclear-forms.html

These forms may be updated from time to time based on operational needs and feedback received.

Please see amendments to the Regulations and Procedures in the links below:

Attachment A – amendments to Regulations

Attachment B – amendments to Procedures

Need more information?

Issued by

Brendan Laird, Senior Manager Settlement Operations

Contact information

Any enquiries should be directed through to the Austraclear and ASX Collateral Service Desk on 1300 362 257 or via email to Austraclear@asx.com.au

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