ASX IN WONDERLAND: IS SOLAGRAN'S 43% MATERIAL?
April 10th 2008 12:47
Thursday April 10, 2008
Daily news on ASX-listed biotechnology companies
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SOLAGRAN
Solagran has told the ASX that its directors did not think their 56 million shares (43%) exposed to Opes Prime were material or in need of disclosure to investors.
In an eight page document including two pages of ASX descriptive preamble and definitions of the Listing Rules the ASX asked 11 specific questions.
The ASX said Companies Update 02/08 states: “Where a director has entered into margin loan or similar funding arrangements for a material number of securities, ASX advises that listing rule 3.1, in appropriate circumstances, may operate to require the entity to disclose the key terms of the arrangements, including the number of securities involved, the trigger points, the right of the lender to sell unilaterally and any other material details.
"Whether a margin loan arrangement is material under listing rule 3.1 is a matter which the company must decide having regard to the nature of its operations and the particular circumstances of the company.
“If, at the time that the Companies Update was released, the company was aware of the information in respect of any, or all, of the directors' margin lending arrangements, and the company did not consider that the information was material, please advise the basis on which the company did not consider the Information to be material to the company," the ASX said.
In reply Solagran said: “The company held a meeting of the board of directors on March 3, 2008.
“At that meeting a copy of ASX’s Companies Update 02/08 was tabled and considered …. the board was aware that three of its four directors had indirectly entered into margin lending arrangements with respect to shares held in the company.
“The board formed the view that the information related to personal financial arrangements of related entities of the directors.
“The board considered that those arrangements were not relevant to the company’s business affairs and operations the board concluded … that the margin loan arrangements of the related entities of the directors were not material; and … therefore did not require disclosure under ASX Listing Rule 3.1," Solagran said.
Solagran’s first announcement to the market on the subject was on April 2 in a request for a trading halt and the following day in an announcement by chairman Dr Vagif Soultanov.
ASX official Roula Rodopoulos told Biotech Daily that there was no strict definition of what was “material” other than the examples under Listing Rule 3.1.
“Materiality in the first instance is a matter for each individual company,” Ms Rodopoulos said. “ASX assesses materiality with reference to the continuous disclosure provisions, especially what the reasonable person would consider to be price sensitive,” she said.
Ms Rodopoulos said the question had never been tested in a court.
In explaining what is material the ASX lists examples of information which would require disclosure but only if the changes were material, which it does not define.
The list includes the appointment of a receiver, manager, liquidator or administrator in respect of any loan, trade credit, trade debt, borrowing or securities held by it or any of its child entities.
It also lists a transaction for which the consideration payable or receivable is a significant proportion of the written down value of the entity’s consolidated assets.
Normally, an amount of five percent or more would be significant, but a smaller amount may be significant in a particular case.
Solagran fell six cents or 10.91 percent to 49 cents.
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