Fund manager slams ASX over McMillan rebuff
Shares in the salary packaging company were suspended two weeks ago after the federal government announced changes to the fringe benefits tax regime. The federal government said the tax changes would help to pay for the revenue shortfall left by scrapping the carbon tax.
McMillan Shakespeare last week asked the ASX if it could remain in a trading halt until after the election. But the ASX rejected the request, saying interruptions to the market should be kept to a minimum.
"In the case of McMillan Shakespeare, the market is as informed as it can be ... which is not the same as there being no residual or ongoing uncertainty," ASX spokesman Matthew Gibbs said.
When shares in McMillan resumed trading on Thursday they fell as much as 50 per cent.
John Abernethy, from Clime Investment, which has $12 million invested in McMillan, has attacked the ASX's decision.
"The ASX took all of one hour to say 'nup, you're going to be listed'," he said. "That decision by the ASX to let the shares trade without due process, consideration and inquiry, going to the Australian Securities and Investments Commission to see what their view was, asking practitioners in the market what their view was ... I could see no reason why they had to list immediately. What was the cost to the ASX to grant some more time for more information to flow?"
But the ASX said McMillan disclosed to the market all material information of which it was "aware", so no proper basis remained to keep its securities suspended. "The purpose of trading halts and voluntary suspensions is as 'mechanisms that listed entities can use to manage their continuous disclosure obligations'," an ASX spokesman said.
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When the ASX refused McMillan Shakespeare's request to remain in a trading halt, trading resumed and the company's shares fell sharply — as much as 50% — after the suspension was lifted.
McMillan Shakespeare's shares were suspended two weeks earlier after the federal government announced changes to the fringe benefits tax (FBT) regime. The government said those tax changes were intended to help pay for a revenue shortfall after scrapping the carbon tax.
McMillan Shakespeare asked the ASX if it could remain in a trading halt until after the election. The ASX rejected that request and ordered trading to resume.
The ASX said interruptions to the market should be kept to a minimum. An ASX spokesman, Matthew Gibbs, said the market was "as informed as it can be" and that McMillan had disclosed all material information of which it was aware, so there was no proper basis to keep the securities suspended.
John Abernethy from Clime Investment, which has $12 million invested in McMillan Shakespeare, strongly criticised the ASX. He said the exchange took only about an hour to refuse the halt and argued it should have carried out more process, inquiry and consultation — including checking with the Australian Securities and Investments Commission (ASIC) and market practitioners — before letting the shares trade.
The ASX said trading halts and voluntary suspensions are mechanisms that listed entities can use to manage their continuous disclosure obligations — essentially tools to help companies manage material information disclosure to the market.
According to the ASX, McMillan Shakespeare disclosed to the market all material information of which it was "aware," and for that reason the exchange concluded there was no proper basis to keep its securities suspended.
This episode highlights that government tax announcements and regulatory decisions can trigger trading suspensions and large share price moves — in this case a fall of up to 50% when trading resumed. Investors should be prepared for volatility around corporate disclosures and regulatory news, and note that exchanges can refuse requests to extend trading halts if they judge the market has been properly informed.
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