The AFR splashed Friday’s paper with ASIC’s big warning about a crackdown on conflicts of interest and poor disclosure in listed investment vehicles.

New ASIC commissioner Belinda Gibson, who is impressing governance campaigners, laid it all out at the IFSA conference in Brisbane on Thursday, generating a cautiously supportively editorial in The AFR today.

The corporate plod’s press release summarising Gibson’s speech included the following, which looks specifically tailored for Babcock and Macquarie:

ASIC will also focus on major transactions involving listed investment vehicles that are trading at a significant discount to their announced asset values. These transactions aim to increase share price or provide an alternative exit mechanism for holders. These transactions can take the form of privatisation, substantial buy-backs, buy-outs of activist shareholders, asset sales and wind-ups.

We will look closely to see how conflicts of interest are handled. Providing arms length valuations and independent expert reports as to value will be of great assistance in our assessment, and that of the market.

ASIC will also look at adequacy and timeliness of disclosure. Directors should be frank about alternatives to the proposed transaction, and the possible benefits of the transaction to the person proposing it.

Jeepers, the plod almost seems to be ahead of the curve here. This will be a major issue over the coming months and we’ve already seen both Babcock and Macquarie privatise one listed vehicle each, with many more expected to come.

It was no wonder ASIC chairman Tony D’Aloisio didn’t launch this new offensive because in a former life he was the ASX CEO who agreed to all those controversial waivers which allowed Macquarie and Babcock not to reveal their full management contracts on various listed funds, such as Macquarie Media and Babcock & Brown Wind Partners.

ASX shareholders are being given an opportunity to protest against this situation at the AGM on September 24 in Sydney because I’ve nominated for the board on a platform that:

ASX rescinds waivers granted to various Babcock & Brown and Macquarie Group listed vehicles that allow them to not fully disclose their management agreements for the likes of Macquarie Airports and Babcock & Brown Power. Once ASX forces this disclosure, and thereby takes the corporate governance and disclosure high road again, Mr Mayne will immediately resign. He has provided ASX with an undated letter of resignation conditional on the completion of such a disclosure process.

The ASX board will finalise the notice of meeting at a board meeting this week so fingers crossed they don’t censor the platform.

Two of the ASX board members, Macquarie Group director Peter Warne and Babcock & Brown audit committee chairman Michael Sharpe, presumably won’t contribute to any discussion about platform censorship given the obvious conflict of interest.

*Listen to this discussion about foreign ownership and debt with 4BC’s Michael Smith.

Peter Fray

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