Section 12 - Acquisitions and other events

Section 12 - Acquisitions and other events

12.1 - Introduction

These procedures detail the key steps involved in the administration of takeover and non-takeover offer events using the bid/offer acceptance functionality (resulting in CHESS subpositions) in the CHESS environment. Corporate action types and their corresponding corporate action event code are outlined in the table below.

Corporate Action Type

Offer Type

Corporate Action Event Code

Option Type Codes (where applicable)

Corporate Action Type

Offer Type

Corporate Action Event Code

Option Type Codes (where applicable)

Off-market takeover offers including proportional bids

Takeover

TEND

Cash consideration (CASH)

Securities consideration (SECU)

Combination of both cash and securities consideration (CASE)

Off-market equal access buy backs

Non-takeover

BIDS

Any corporate action which uses the bid/offer acceptance functionality that is not a takeover or buy-back event published by Corporate actions STP such as a reinvestment offer

Non-takeover

OTHR

CHESS facilitates both participant and bidder/offeror initiated acceptances (and withdrawals) into these off-market event.

CHESS notifies sponsored security holders when their financial products are reserved for the purposes of any of these events and when the balance of a subposition changes.

An issuer/bidder or their agent must be a participant in CHESS and be accredited for processing takeover offer or processing a non-takeover offer event such as a buy-back or reinvestment offer. The ASX Settlement Operating Rules provide for limited participation to facilitate takeover processing.

Terminology

Terminology differences between the APG and technical documentation for this section are outlined in the table below.

Technical Documentation Term

APG Term

Technical Documentation Term

APG Term

Bid offer

  • Bid/offer (for takeovers and reinvestment offers); and

  • Buy-back (for buy-backs).

Offeror

  • Bidder/offeror (for takeovers and reinvestment offers); and

  • Buy-back offeror (for buy-backs).

Bid election

  • Bid/offer acceptance (for takeovers and reinvestment offers); and

  • Buy-back acceptance (for buy-backs).

Sub-position

  • Bid/offer subposition (for takeovers and reinvestment offers); and

  • Buy-back subposition (for buy-backs).

Per the ASX Settlement Operating Rules, ‘bidder’ applies in the context of a takeover offer event, whereas ‘offeror’ applies in the context of non-takeover offer events.

12.2 - On-Market Takeover

An on-market takeover is a market bid/offer to purchase securities in an ASX listed company, made in accordance with the provisions of the Corporations Act. Such an offer is commonly referred to as an on-market bid/offer.

CHESS has no processing specific to an on-market bid/offer. Acceptance of the bid/offer is effected by a sale through a market participant and subsequent transfer of title, in the same manner as for any market trade.

12.3 - Off-Market Takeover - Overview

To enable the bidder/offeror to fulfil the CHESS operational requirements as outlined in these procedures the bidder/offeror must either:

  • apply to ASXS for admission as a Specialist Settlement Participant for the limited purpose of acting as a participant bidder (or in the case of a buy-back or other non-takeover offer event, a participant offeror); or

  • appoint an existing CHESS accredited facility user (e.g. registry or a participant) to act as the bidder’s/offeror’s agent for the limited purpose of acting as a participant bidder (or in the case of a buy-back or other non-takeover offer event, a participant offeror).

The bidder/offeror must notify ASXS at least five business days before the start of the bid/offer period who will act as the Specialist Settlement Participant, including information required under the ASX Settlement Operating Rules.

This process is followed for both takeover and non-takeover events. For specific requirements, bidder/offerors should refer to the ASX Settlement Operating Rules.

The financial products subject to a bid/offer must be CHESS approved for these procedures to apply. The bid/offer may relate to multiple classes of financial products. The bidder/offeror notifies the security holders in each security class affected.

Concurrent bids/offers on the same class of financial products are supported in CHESS.

The bid/offer is given an initial status of “conditional” or “unconditional” on CHESS. Either status enables CHESS to receive acceptances from participants and on-forward the acceptance to the bidder/offeror.

An “unconditional” status additionally enables the processing of takeover transfers initiated by the bidder/offeror. Refer to section 12.3.4 for further details.

Refer to Takeovers and Buy-backs (Bid Offers) Overview for further details.

Off-Market Takeover Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for off-market takeovers and approximate times after announcement that these events occur. More detailed procedures are provided in subsequent sections.

12.3.1 - Accepting an Off-Market Bid/Offer

Security holders whose securities are held on the CHESS subregister may accept an off-market bid/offer by advising their sponsoring participant or the bidder/offeror (agent) of their acceptance.

Procedure

Step

Description

Step

Description

1

An off-market takeover offer is announced to the market. CHESS receives notifications of the relevant details of the takeover offer event triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement attributes such as the corporate action event identification number and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a takeover the event type code is TEND, and the offer type is off-market, proportional (refer to section 12.4) or on-market.

2

The bidder/offeror receives the details of registered holdings from the target company as at the defined register date.

3

The bidder/offeror mails offer documents to all security holders of the targeted financial products.

The offer documents issued to CHESS security holders must include the CHESS accounts (HINs) and security class of financial product codes of the registered CHESS holdings that are subject to the bid and may include the corporate action ID. References to holding details must clearly identify those which are CHESS holdings.

Off-Market Bid/Offeror Acceptance

4

Security holders may accept the takeover by:

The bid/offer acceptance may optionally contain the Distinct Portion Indicator field, which establishes whether the number of securities covered by the acceptance relates to a distinct portion of a holding within the terms of the Corporations Act. Participants holding securities in a single holding on behalf of one or more security holders use the indicator if only one or some of the security holders wish to accept the bid/offer.

Under the ASX Settlement Operating Rules, participants are responsible for responding with a confirmation or a rejection of a bidder/offeror initiated bid acceptance within the Scheduled Time, i.e. by the end of the day on the business day following the receipt of the notification message. In addition, the participant is required under the ASX Settlement Operating Rules to include the Target Transaction Id whether they confirm or reject the bidder’s/offeror’s request.

If confirming the takeover, the participant must ensure the securities are not encumbered.

CHESS validates the bidder/offeror (agent) and/or participant initiated messages, updates the CHESS subregister holding and confirms completion to the participant and bidder/offeror (agent).

CHESS rejects requests where the available holding does not have sufficient securities.

5

Where the acceptance is successful, ASXS notifies security holders of their acceptance.

Securities are held in a bid/offer subposition and are not eligible for settlement, transfer, conversion or other holding adjustment that may be initiated by an issuer (registry) that would result in the removal of those securities.

A security holder may choose not to accept into the off-market takeover offer. In the event the bid/offer proceeds to compulsory acquisition, any securities that have not been accepted will be compulsorily acquired (refer to section 12.3.8),

6

In the event the bidder/offeror rejects the bid/offer acceptance, ASXS notifies security holders of the bidder’s/offeror’s rejection of the acceptance.

 

12.3.2 - Accepting an Off-Market Bid/Offer for Securities Traded during the Bid/Offer Period

For securities traded during the bid/offer period, the provisions of the Corporations Act mean the securities are deemed to trade with the entitlement to accept the bid/offer. An eligible investor that purchases bid class securities on-market during the bid/offer period (or otherwise acquires the bid class securities) may accept the bid/offer following registration, provided that the acceptance is made during the bid/offer period.

However, during the last few days of a bid/offer, a security holder may wish to accept a bid/offer on the results of a trade that won’t settle before the bid/offer closes. In such cases, the security holder’s participant should request a settlement earlier than the standard T+2 or make other arrangements with the counterparty to ensure acceptance, if desired.

For settlement obligations which will not settle by the bid/offer close date, participants may:

  • For a failed novated settlement obligation, utilise the Isolate Counterparty Process to identify the counterpart to the transaction and arrange either protection or settlement by demand transfer; or

  • For a failed bilateral settlement instruction, arrange for protection from the counterpart, or settlement by demand transfer (refer to section 7.2).

12.3.3 - Withdrawing an Acceptance for an Off-Market Bid/Offer

During the bid/offer period, a security holder who has accepted the bid/offer may wish to withdraw their acceptance(s). A withdrawal request does not have a one-to-one relationship with the original bid/offer acceptance. A withdrawal request is based on securities not transactions. There are two circumstances in which an acceptance may be withdrawn:

  • by mutual agreement between the bidder/offeror and the security holder; or

  • where the security holder is legally entitled to have a bid/offer acceptance withdrawn.

Where the withdrawal is initiated by the participant, CHESS acts as the agent of the bidder/offeror. This means that CHESS will act to release a security holder’s bid/offer subposition only where the bidder/offeror has consented to its release.

A security holder may be entitled to have bid/offer subposition securities withdrawn.

Where the security holder is legally entitled to have a bid/offer subposition withdrawn and the withdrawal is initiated by the participant, the bid/offeror must authorise the release of the bid/offer subposition securities within two business days. CHESS will housekeep withdrawal requests where the bidder/offeror does not respond to the withdrawal request within two business days.

Procedure

Step

Description

Step

Description

1

Security holders may withdraw their bid/offer acceptance by:

CHESS validates the bidder/offeror (agent) and/or participant initiated messages, updates the CHESS subregister holding and confirms completion to the participant and bidder/offeror (agent).

CHESS rejects requests where the bid/offer subposition does not have sufficient securities.

2

Where the withdrawal is successful, ASXS notifies the security holder of the withdrawal.

 

12.3.4 - A Conditional Off-Market Bid/Offer Becomes Unconditional

After a bid/offer has been declared free of conditions, the transfer of accepted securities to the bidder/offeror can be effected in exchange for the payment of the takeover consideration to the security holder.

Procedure

Step

Description

Step

Description

1

The bidder/offeror notifies ASXS that a bid/offer has been declared unconditional.

When a bid/offer becomes unconditional, the bidder/offeror may initiate the Bid Offer Transfer Process.

The bidder/offeror must include a reason code of TEND on their Corporate Action Related Transfer message (hold_229). This code will indicate that securities will be removed from the bid/offer subposition of an account (HIN).

The reason code will be notified to the participant.

CHESS will reject the transfer request where the bid/offer subposition does not have sufficient securities.

CHESS continues to process valid bid/offer acceptances until the bid/offer close date.

2

If the takeover consideration involves the issue of securities, the bidder/offeror arranges for the security consideration to be issued to eligible security holders through the Holding Adjustments Process with the reason code Takeover Transaction (TKAC).

If the resultant securities are CHESS approved they should be issued on the same subregister as the target holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the target account (HIN).

If the takeover consideration involves the payment of cash, the bidder/offeror will facilitate the payment(s) outside of CHESS.

 

12.3.5 - Closing a Successful Off-Market Bid/Offer

At the end of a bid/offer period ASXS closes the CHESS acceptance codes for the bid/offer.

Procedure

Step

Description

Step

Description

1

The bidder/offeror advises ASXS when no more bid/offer acceptances are to be processed by CHESS.

This prevents CHESS accepting further acceptances from participants but enables takeover transfers from the bidder to continue to be processed.

 

12.3.6 - Finalising a Successful Off-Market Bid/Offer

The bidder/offeror advises ASXS when they have completed transferring bid/offer acceptances to the bidder/offeror through the Bid Offer Transfer Process.

Procedure

Step

Description

Step

Description

1

The bidder/offeror notifies the ASXS when all bid/offer acceptances have been processed.

When either finalised or a predetermined period lapses, CHESS no longer accepts any activity in relation to the takeover except relevant reporting requests for historical activity.

2

Where required, the bidder/offeror converts any CHESS subregister holdings to the issuer sponsored subregister through the Participant to Issuer Sponsored Conversion Process.

3

CHESS releases any remaining related bid/offer subpositions, if any still exist, through the Bid Finalisation, Lapse and Withdrawal Process.

4

In the event bid/offer subpositions are released a notification advising of the withdrawal of the acceptance is sent to the sponsored security holder.

 

12.3.7 - Completing a Lapsed Off-Market Bid/Offer

Where the bid/offer has been subject to a defeating condition and the bidder/offeror has not declared the bid/offer to be free from that condition within the defined period, acceptances received to that time will be released from an bid/offer accepted sub position and will become available for transacting on.

Procedure

Step

Description

Step

Description

1

The bidder/offeror notifies ASXS of the lapsed bid/offer.

2

ASXS releases all related bid/offer subpositions through the Bid Finalisation, Lapse and Withdrawal Process.

3

A notification advising of the withdrawal of the acceptance is sent to the sponsored security holder.

 

12.3.8 - Compulsory Acquisition

A bidder/offeror may compulsorily acquire any remaining securities from security holders if it has met the compulsory acquisition threshold per section 661A of the Corporations Act.

Procedure

Step

Description

Step

Description

1

The bidder/offeror advises ASXS that, pursuant to the Corporations Act, they are acquiring outstanding securities.

2

The bidder/offeror (agent) sends all security holders whose securities are the subject of compulsory acquisition a notice pertaining to the compulsory acquisition including the rights of those remaining security holders.

3

The target issuer subregister is closed by ASXS (refer to section 10.6). CHESS rejects any transfer or conversion of the target securities after end of day on the 5th business day after the last listed date.

4

The issuer adjusts the relevant holdings through the Holding Adjustments Process with the reason code Compulsory Acquisition By Offeror (CAQO) so that the bidder/offeror becomes the registered security holder of the outstanding securities.

5

After the prescribed compulsory acquisition period, the bidder/offeror will send claim forms to those dissenting security holders. Dissenting security holders can lodge a claim for their consideration directly with the bidder/offeror (agent).

6

Generally, CHESS archives the subregister 20 business days after it has been closed and it ceases to be listed through the Security Sub-register Status Notification Process.

 

12.4 Proportional Off-Market Takeover Offers

A proportional takeover offer is an off-market bid/offer that is made or purports to be made under section 618(1)(b) of the Corporations Act in respect of a specified proportion of securities included in a class of securities in a company.

The bidder/offeror must notify ASXS at least five business days before the start of the bid/offer period who will act as the Specialist Settlement Participant, including information required under the ASX Settlement Operating Rules.

Procedure

Step

Description

Step

Description

1

An off-market proportional takeover offer is announced to the market. CHESS receives notifications of the relevant details of the takeover offer event triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a takeover the event type code is TEND and the bid/offer type is proportional.

2

The bidder/offeror receives the details of registered holdings from the target company as at the defined register date.

3

The bidder/offeror mails offer documents to all security holders of the targeted financial products.

The offer documents issued to CHESS security holders must include the CHESS accounts (HINs) and security class of financial product codes of the registered CHESS holdings that are subject to the bid/offer and may include the corporate action ID. References to holding details must clearly identify those which are CHESS holdings.

4

Should the ASX determine a need for a bid/offer accepted market for the bid/offer, it establishes a quotation code for this purpose. This market (bid/offer accepted market) will typically be established from the bid/offer open date. The bid accepted code is quoted with a basis of deferred settlement. The securities are notional and cannot settle in this form. Obligations are accepted by CHESS and settle following the completion of the proportional bid.

Bid Acceptance

5

Security holders may accept the takeover by:

The bid/offer acceptance may optionally contain the Distinct Portion Indicator field, which establishes whether the number of securities covered by the acceptance relates to a distinct portion of a holding within the terms of the Corporations Act. Participants holding securities in a single holding on behalf of one or more security holders use the indicator if only one or some of the security holders wish to accept the bid/offer.

CHESS validates the bidder/offeror (agent) and/or participant initiated messages, updates the CHESS subregister holding and confirms completion to the participant and bidder/offeror (agent).

CHESS rejects requests where the holding does not have sufficient available securities.

Full acceptance of the proportional bid/offer
The proportional bid/offer is conditional and acceptance is done through CHESS. 100% of the holding must be moved to a bid/offer subposition. The remaining balance cannot be accessed until after finalisation of the proportional bid/offer. Security holders wishing to sell part or all of the remaining balance must do so through the bid/offer accepted market (deferred market) established by ASX.

Acceptance of less than the proportional bid/offer
If accepting the bid/offer for less than the proportional bid/offer percentage of a security holder’s holding through CHESS, the number of securities pertaining to the bid/offer acceptance within the acceptance must be grossed up.

6

Where the acceptance is successful, ASXS notifies security holders of their acceptance.

Securities are held in a bid/offer subposition and are not eligible for settlement, transfer, conversion or other holding adjustment that may be initiated by an issuer (registry) that would result in the removal of those securities.

A security holder may choose not to accept into the of market takeover offer. In the event the bid/offer proceeds to compulsory acquisition, any securities that have not been accepted will be compulsorily acquired (refer to section 12.3.8),

7

In the event the bidder/offeror rejects the bid/offer acceptance, ASXS notifies security holders of the bidder’s/offeror’s rejection of the acceptance.

Conditional Proportional Off-Market Bid/Offer Becomes Unconditional

8

The bidder/offeror notifies ASXS that a bid/offer has been declared unconditional.

When a bid/offer becomes unconditional, the bidder/offeror may initiate the Bid Offer Transfer Process.

The bidder/offeror must include a reason code of TEND on their Corporate Action Related Transfer message (hold_229). This code will indicate that securities will be removed from the bid/offer subposition of an account (HIN).

The reason code will be notified to the participant.

CHESS will reject the transfer request where the bid/offer subposition does not have sufficient securities.

CHESS continues to process valid bid/offer acceptances until the bid/offer close date.

9

If the takeover consideration involves the issue of securities, the bidder/offeror arranges for the security consideration to be issued to eligible security holders through the Holding Adjustments Process with the reason code Takeover Transaction (TKAC).

If the resultant securities are CHESS approved they should be issued on the same subregister as the target holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the target account (HIN).

If the takeover consideration involves the payment of cash, the bidder/offeror will facilitate the payment(s) outside of CHESS.

12.5 - Buy-Backs - Overview

The Corporations Act provides that a company, under certain circumstances, can buy‑back their own securities. This results in that portion of the issued capital being cancelled.

Buy-backs may take place either on-market or off-market.

For further details refer to Takeovers and Buy-backs (Bid Offers) Overview.

12.5.1 - On-Market Buy-Back

An on-market buy-back by a company listed on the ASX occurs via the ordinary course of trading in accordance with the ASX Settlement Operating Rules and the Corporations Act.

CHESS has no processing specific to an on-market buy-back. The buy-back is effected by purchase through a market participant and subsequent transfer, in the same manner as for any market purchase.

12.5.2 - Off-Market Equal Access Buy-Back

An equal access buy back is when a company makes a uniform offer to each security holder to buy back a proportion of each of their securities. The company must send an offer document to security holders setting out the terms of the buy-back offer. During the buy-back period, security holders are entitled to accept the buy-back offer or take no action.

The buy-back offeror must notify ASXS at least five business days before the start of the buy-back period who will act as the Specialist Settlement Participant. Refer to the ASX Settlement Operating Rules relating to non-takeover events.

Where a security holder intends to accept a buy-back offer, they must do so in the manner specified by the offer document.

Off-Market Buy-back Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for off-market buy-backs and approximate times after announcement that these events occur. More detailed procedures are provided in the subsequent section.

12.5.3 - Equal Access Buy-Back through CHESS

The buy-back offeror will need to meet CHESS operational requirements to enable buy-back acceptances to be made in electronic form (refer to section 12.3).

Where the security holder wishes to withdraw their buy-back acceptance, the procedure within section 12.3.3 applies.

Procedure

Step

Description

Step

Description

1

Issuer announces the terms of the equal access buy back. CHESS receives notifications of the relevant details of the non-takeover event triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of an equal access buy back the event type code is BIDS.

(a) Allocation of Entitlement

2

At start of day on the ex date for the equal access buy back, CHESS establishes a notional cum entitlement balance for each holding in the parent security on the CHESS subregister. When established, this balance is equal to the holding balance.

3

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the target security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements apply (refer to section 10.1.2), but participants can override these when they submit the transactions to CHESS.

CHESS rejects transactions with a designated override basis of movement and a settlement date outside the ex period.

4

On or shortly after the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS. This may be useful for the participant’s reconciliations.

(b) Acceptance

5

Where the buy-back offeror has elected to use the bid/offer acceptance functionality, eligible security holders may submit a buy-back acceptance by:

CHESS validates the buy-back offeror (agent) and/or participant initiated messages, updates the CHESS subregister holding and confirms completion to the participant and buy-back offeror (agent).

Alternatively, acceptances may be processed outside of chess directly with issuer (registry).

(c) Finalisation of Buy-back

6

Issuer notifies ASXS of the result of the buy-back, including if a scaleback is to be applied.

7

The issuer (registry) initiates the Bid Offer Transfer Process with the reason code BIDS.

8

The issuer (registry) will make the buy-back proceeds payment directly to participating security holders. There is no processing within CHESS.

Where buy-back acceptances have not been facilitated using the bid/offer acceptance functionality, the issuer (registry) will also initiate the Holding Adjustments Process for those buy-back acceptances, with the reason code Buyback Transactoin (BYBK).

9

CHESS releases any remaining related buy-back subpositions, if any still exist, through the Bid Finalisation, Lapse and Withdrawal Process.

12.6 - Scheme of Arrangement - Overview

A scheme of arrangement under Part 5.1 of the Corporations Act enables a company to reconstruct its capital, assets or liabilities with the approval of its security holders and the Court. Consideration pertaining to a scheme may be either cash, securities or a combination of both. In some instances security holders will be given a choice of consideration to be received.

In the event the scheme of arrangement allows for alternative scheme considerations, security holders have a choice of:

  • nominating the scheme consideration of their choice; or

  • taking no action and receiving the default scheme consideration.

Security holders may nominate their choice of scheme consideration by:

  • lodging their scheme election forms directly with the issuer (registry); or

  • such other means as an offer document permits.

Scheme of Arrangement Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for schemes of arrangement and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Procedure

Step

Description

Step

Description

1

A scheme of arrangement is announced to the market. CHESS receives notifications of the relevant details of the non-takeover offer event triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a scheme of arrangement, the event type code is MRGR.

2

On record date, CHESS closes the subregister through the Security Sub-register Status Notification Process.

3

On the scheme implementation date the issuer (registry) initiates the Holding Adjustments Process with the reason code Scheme Of Arrangement (SCOA).

4

If the scheme consideration involves the issue of securities, the issuer takes the necessary steps for the security consideration to be issued to eligible security holders. This is done by the acquirer using the Holding Adjustments Process with the reason code Scheme Of Arrangement (SCOA).

If the resultant securities are CHESS approved they should be issued on the same subregister as the target holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the target account (HIN).

If the scheme consideration involves the payment of cash, the issuer will facilitate the payment(s) outside of CHESS.

5

Generally, CHESS will archive the target company subregister 20 business days after it has been closed and the security ceases to be listed through the Security Sub-register Status Notification Process.

12.7 - Maturity and Redemption

Some securities are issued for a finite period and either mature/expire with no residual value or are redeemed by repayment of their initial value.

In some cases, the issuer may offer security holders the opportunity to voluntarily redeem their securities prior to maturity/expiry. In such cases the security holder will lodges a redemption request directly with the issuer (registry). The issuer (registry) repays those funds directly to the security holders.

An issuer may also provide an option to rollover the maturing security, in which case the security holder must advise the issuer of their intent to rollover into the new financial product within the time-frame indicated by the issuer.

CHESS does not facilitate the repayment or redemption request.

Rollovers may be processed in a similar manner to a conversion, or alternatively as a reinvestment offer which will typically be in conjunction with a debt raising that may include a security holder/priority offer of a new security. An election to reinvest is supported in CHESS.

CHESS triggers the processing events for a maturity, redemption or reinvestment upon receipt of the relevant details of corporate actions from ASX Market Data.

12.7.1 - Maturity

This procedure covers a maturity.

Procedure

Step

Description

Step

Description

1

The issuer (registry) requests balances of the expiring/maturing holdings from the CHESS subregister through the Holding Balance (HBAL) process.

2

The issuer (registry) sends the notices to all existing security holders at least 20 business days before but not more than 30 business days before the maturity date. The notices sent by the issuer (registry) advise the security holders of the expiring/maturing securities of the last day of trading in those securities, the maturity date and other necessary information required under the ASX Listing Rules and Appendices.

3

The issuer (registry) sends supplementary notices to new security holders and security holders whose holdings have increased between this date and the fifth business day before and inclusive of the maturity/expiry date.

4

From the date of issue of the first notice (maturity date -20 days) participants securities that are due to mature/expire must advise buying clients on the buy tax invoice or by an attachment to the tax invoice of the following information:

  • the last day of trading for the notes; and

  • the maturity/expiry date.

5

Trading in the maturing/expiring securities ceases on the fourth business day before the maturity date.

6

CHESS closes the subregister to participant transactions at the close of business on the maturity/expiry date, but remains open for participant reporting requests until archived.

7

At maturity/expiration the issuer (registry) calculates the redemption payment for all those security holders registered as at the maturity/expiration date. The issuer (registry) then transmits adjustment messages to CHESS to reduce the balances of the matured/expired securities to nil through the Holding Adjustments Process with the reason code Maturing Security (MATU).

CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry). If a issuer (registry) message is invalid, or there are insufficient securities in the holding, it will be rejected to the issuer (registry).

8

The issuer (registry) forwards any payments to the participant.

Alternatively, if the security holder has elected to rollover, the issuer (registry) converts the holding into the new financial product. 

The participant verifies the amount or the securities received and distributes them to the relevant security holders internally.

9

ASXS can suspend outstanding transactions at their discretion on a case-by-case basis.

10

Generally, CHESS archives the subregister of the matured/expired securities 20 business days after it has been closed (refer to section 10.6).

 

12.7.2 - Voluntary Redemption

This procedure covers voluntary redemption.

Procedure

Step

Description

Step

Description

1

The issuer (registry) advises security holders of the opportunity for an early redemption.

2

The participant internally records details of the securities to be redeemed based on the instructions from their clients.

3

The participant or security holder lodges the application for early redemption with the issuer (registry).

4

The issuer (registry) processes the redemption and sends details of the redeemed securities to CHESS through the Holding Adjustments Process with the reason code Share Redemption (REDM). CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry). If an issuer (registry) message is invalid, or there are insufficient securities in the holding, it will be rejected to the issuer (registry). The participant confirms the securities redeemed, processes the redemption internally, verifies the closing balance and monitors receipt of the funds.

5

The issuer (registry) remits the redemption proceeds directly to the security holder.

 

12.7.3 - Reinvestment Offers

A reinvestment offer is typically one component of an entity’s larger debt raising. It enables eligible security holders of a target security (the security the subject of reinvestment), to elect to have all or part of that target security reinvested into a new debt security.

The bidder/offeror will need to meet CHESS operational requirements to enable reinvestment offer acceptances to be made in electronic form (refer to section 12.3).

Where the security holder wishes to withdraw their bid/offer acceptance, the procedure within section 12.3.3 applies.

Procedure

Step

Description

Step

Description

1

A reinvestment offer is announced to the market typically as a part of a broader raising. CHESS receives notification of the relevant details of the non-takeover event triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a reinvestment offer, the event type code is OTHR.

2

An issuer (registry) will use end of day balances on the record date to determine to whom an offer is made.

ASX does not support a cum market for the purposes of determining entitlements to participate in a reinvestment offer.

3

The issuer mails offer documents to all eligible security holders of the security subject to the reinvestment offer.

4

Security holders may accept into the reinvestment offer by:

CHESS validates the bidder/offeror (agent) and/or participant initiated messages, updates the CHESS subregister holding and confirms completion to the participant and bidder/offeror (agent).

CHESS rejects requests where the holding does not have sufficient available securities.

5

Where the acceptance is successful, ASXS notifies security holders of their acceptance.

6

Following the close of an offer the issuer (registry) will initiate the Bid Offer Transfer Process with the reason code OTHR.

7

CHESS no longer accepts any participant activity in relation to a reinvestment offer except relevant reporting requests for historical activity from the offer close date.

8

The issuer takes the necessary steps for the security consideration (resultant from the reinvestment offer) to be issued to eligible security holders through the Holding Adjustments Process with the reason code Rollover or Reinvestment (ROLL).

If the resultant securities are CHESS approved they should be issued on the same subregister as the target holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the target account (HIN).

If there is a payment of cash to be made, the issuer will facilitate the payment(s) outside of CHESS.