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| Companies Update 25 March 2004 |
Update no 05/04 |
Important information for ASX Listed Entities
Audit Committee Requirements, Composition, Operation & Responsibility, Listing Rule amendment
On 1 January 2003 ASX introduced listing rule 12.7 which provides that an entity included in the Standard & Poors All Ordinaries Index (the top 500 companies by market capitalisation) must have an audit committee and that the composition, operation and responsibility of the audit committee must comply with the best practice recommendations of the ASX Corporate Governance Council (CGC).
The requirement was introduced as part of the Enhanced Disclosure package of listing rule amendments and was subsequent to the proposals contained in the CLERP 9 discussion paper released in late 2002.
Following consideration and review by the ASX Corporate Governance Council Implementation Review Group and agreement with Treasury and the Parliamentary Secretary to the Treasurer, a decision has been made to amend the requirement as follows:
- the top 500 entities will still be required to have an audit committee;
- only the top 300 entities in that group will be required to comply with the CGC recommendations as regards composition, operation and responsibility.
- all other entities must still provide "if not why not" reporting in relation to CGC recommendations they do not adopt.
ASX proposes to approve and lodge the proposed rule amendment with ASIC within the next two weeks, which would mean that the rule will most likely take effect in the latter part of April. Listed entities may wish to adjust their planning to take account of the impending amendment accordingly.
JORC Code Compliance, Chapter 5 of ASX Listing Rules
In recent months ASX has noted some instances where companies, when reporting mineral resources and ore reserves, have announced resources which are not in compliance with the requirements of the JORC Code. In some instances, announcements have referred to a
non-JORC compliant "resource of xx tonnes and yy grade...".
ASX, in consultation with JORC, takes the view that this represents unacceptable practice under the JORC Code, compliance with which is a requirement of Chapter 5 of ASX Listing Rules.
Chapter 5 of the ASX listing Rules requires ASX listed companies to prepare exploration results and mineral resources and ore reserves estimates in compliance with the JORC Code. The description of a resource or reserve estimate as a "non-JORC compliant", resource or reserve estimate is not acceptable to ASX.
Where a listed company does release to the market a "non-JORC compliant" resource or reserve estimate without prior consultation with ASX, ASX will consider halting trading in the entity's quoted securities until the matter is clarified/rectified.
There may be limited occasions where a listed company believes it needs to provide a "non-JORC compliant" estimate under the Continuous Disclosure requirements of the ASX Listing rules. In such cases a company will need to consult with ASX prior to making such disclosure.
New Listings, listing rule 1.16
The description of a resource or reserve estimate as a "non-JORC
compliant" resource or reserve estimate in relation to, or in conjunction with, an application for admission to the official list is not acceptable to ASX.
There may be limited circumstances where a company believes it needs to provide a "non-JORC compliant" estimate under the Corporations Act and/or Continuous Disclosure requirements of the ASX Listing rules. In such cases an applicant for admission should consult with ASX prior to doing so.
Full information about JORC Code is available on the JORC web site.
ASX looks forward to your company's cooperation in helping to maintain the highest standards in reporting exploration results, mineral resources and ore reserves.
ASX/JORC Initiatives
ASX and JORC are committed to ensuring that a high standard of compliance with the JORC Code by ASX listed entities is maintained, and accordingly, are working together on a number of initiatives towards that objective. Further details will be provided in a future Companies Update as soon as these initiatives are finalized.
For further information please contact your Companies Adviser.