The legal relationship between the Australian Stock Exchange and listed companies

Abstract

This article will examine the legal relationship between the Australian Stock Exchange (ASX) and listed companies. It will be argued that the legal framework of this relationship is so indeterminate as to raise the question of whether it creates a binding obligation upon either the ASX or listed companies. The indeterminacy of the framework is caused in part by an assumption that contract forms te basis of the relationship. That assumption will be disputed. The assumption has given rise to two distinct approaches by the judiciary in interpreting the listing relationship. One approach - the narrow school - tends to deny the efficacy of both the contract and the legal framework built upon it. By contrast, the wide school embraces the assumption as to the efficacy of the contract. In the result, the legal obligations arising from the relationship are very unclear. There have been various attempts by the legislature to bolster the operation of the contract, such as the enactment of s 777 of the Corporations Law and its predecessors. The most recent example is the passage of the Corporate Law Reform Act 1994. This Act uses the listing rules as the basis of the obligation upon listed companies to make disclosures under the continuous disclosure regime. It will be argued that these provisions only build upon the quandry and create further but dependent obligations which are confounded by the indeterminacy of the core.