Key Points:
Two recent ASIC changes will affect substantial holding
notices and borrowing rights under prime broking and securities
lending programs.
ASIC has created a legal fiction for substantial holding notices
by securities lenders.
Essentially, the fiction is that lenders continue to have
notifiable relevant interests in lent shares – even when
they don't.
The relevant interest chain
To understand how this is intended to make life easier, consider
this scenario.
Person A owns 5% of a company and has lodged a substantial
notice in relation to that holding. He lends those shares to Person
B. Person A continues to have a relevant interest, because he can
demand that B return the shares. Person B has a relevant interest
in the shares because he's now the registered owner of
them. Person B is required to lodge a substantial holding
notice.
