Ready, set, disclose: ASIC’s enhanced beneficial ownership rules – key M&A changes
Ahead of the Deal - Australian M&A briefing
Key insights
- ASIC has finalised its updated guidance and relief (Instrument 2026/482) on the enhanced substantial holding and beneficial ownership regime.
- The new regime takes effect on 4 December 2026. For the prescribed substantial holding notice (SHN) forms, both the old and new forms can be used until 4 June 2027, after which only the new forms may be used.
- Deemed economic interests (DEIs) and offsetting short positions will now be calculated by using the full notional amount, subject to basket, index and other exclusions. This is effective 4 December 2026.
- Market-maker and client-services exclusions remain available, but only within defined parameters and with a 20% backstop disclosure requirement.
- Bidders, investors, banks and other derivative writers, listed entities and advisers should analyse their (and their associates') derivative exposures and review their registers prior to 4 December 2026.
"The first few months will no doubt see both market participants and ASIC tackle the practical questions that have not yet been addressed. The market will benefit from further worked examples of complex (yet common) scenarios to which the new regime applies."
On 30 July 2026, following the consultation that took place earlier this year via Consultation Paper 387 (CP 387) (discussed in our previous article), ASIC has finalised its policy on the enhanced beneficial ownership disclosure reforms to take effect on 4 December 2026.
The new regime captures deemed economic interests (DEIs) arising from physically and non-physically settleable equity derivatives. It also extends to foreign-incorporated entities listed on an Australian financial market.
While the familiar 5% threshold, 1% movement trigger and cessation obligation remain central to substantial holding disclosure obligations, listed entities can expect higher record-keeping requirements and more onerous operational burdens in maintaining ongoing compliance come 4 December.
ASIC’s final package
ASIC Corporations (Listed Entities Enhanced Beneficial Ownership) Instrument 2026/482 (Instrument 2026/482), together with related instruments and updated regulatory guidance, provide for the following technical settings as finalised by ASIC:
- how DEIs and offsetting short positions should be calculated;
- exceptions for baskets and indexes, as well as for specified market activities;
- foreign-equivalence declarations (for a limited number of foreign markets); and
- the obligation on listed entities to maintain a register of relevant interests.
ASIC Corporations (Amendment and Repeal) Instrument 2026/483 makes consequential amendments, including to the ETF relief framework, and repeals ASIC Corporations (Bidder Giving Substantial Holding Notice) Instrument 2023/685 as Schedule 1 to the Treasury Law Amendment (Strengthening Financial Systems and Other Measures) Act 2025 (Cth) incorporates that relief into the Corporations Act.
The new SHN (approved by ASIC through the ASIC Corporations (Substantial Holding Notice Forms Approval) Instrument 2026/595) is structured around the new regime, however until 3 June 2027, the existing SHN Forms 603, 604 and 605 can continue to be used as long as the new DEI disclosures are made in compliance with the new regime.
Consequential and related updates to ASIC RG 5 (Relevant interests and deemed economic interests), RG 222 (Substantial holding disclosure and tracing requirements – replacing the previous RG 222 on securities lending) and RG 9 (Takeover bids) have been made to reflect the substantial holding framework, and (to a lesser extent) similar updates have also been made to RG 6, RG 10, RG 74, RG 128 and RG 193. RG 86 on beneficial ownership tracing has been withdrawn.
The new SHN and the six-month transition
The new SHN notice warrants attention well in advance of a disclosure event arising. The format contemplates prominent disclosure of relevant interests but also expects disclosure of the relevant derivative interests in its various categories, notwithstanding market feedback suggesting a preference for simplified aggregated disclosure for corporate groups; ASIC's view on this was that such aggregated disclosure would reduce the utility of the information available to the market.
Notably, the existing SHNs (Forms 603, 604 and 605 for initial, changed or "ceasing" substantial holdings respectively) have been combined into a single form, but the complexity in the disclosure categories required under the new reforms remains, with the form requiring details of:
- the holder’s relevant interests, DEIs and offsetting short positions;
- the circumstances giving rise to those interests;
- associates and relevant agreements; and
- the consideration or other relevant transaction details.
As noted above, from 4 December 2026 until 3 June 2027, market participants can either use the SHN or the old (transitional) versions, provided that the disclosure required under the new regime is made in an annexure. From 4 June 2027, only the new SHN format may be used. In either case, the 2 business day (or next trading day by 9.30am) timeline continues to apply and prospective bidders should familiarise themselves with the new SHN template.
Full-notional calculations and basket/index relief
A significant change from the CP 387 consultation is the simplification of full-notional amount calculations.
In Instrument 2026/482, ASIC ultimately decided to treat the number of underlying securities as the full notional amount for all non-physically settleable derivatives. This contrasts with the approach put forth in CP387, where ASIC sought feedback on a bifurcated approach: full notional amount for linear, symmetric derivatives, "generally accepted standard pricing model" (for example, Black-Scholes) for others. This is a good result as it facilitates simpler calculations, removing the need for daily delta tracking and avoiding the consequential administrative burden, although it may in some cases overstate exposure for some non-linear products.
The same change in calculation basis applies to offsetting short positions, in that the full notional amount of securities of the class underlying the derivative will be used, irrespective of whether the product has a linear, symmetric payoff profile. Long and short positions remain separate disclosures, meaning internal systems will need to preserve the long and short components and the underlying class data.
As suggested in CP 387, basket and index derivatives will be treated differently, with the notional amount for a particular class to be allocated by the value weighting of that class within the broader index. A person will be taken to have a DEI in zero underlying securities within a class where their overall exposure via the basket or index is below 5% of that class and the class represents less than 30% by value of the basket or index (as opposed to the 20% put forth in CP387).
A separate carve-out applies where the index is compiled under a publicly available methodology by one of the specified major index providers (for example S&P, Bloomberg) and its constituents are quoted, or where an ETF tracks the basket or index.
Those carve-outs are not unconditional; for instance, they do not apply where the person or an associate can influence the composition or weighting of the basket or index. Furthermore, the small-exposure and major-index/ETF exceptions do not apply during a takeover bid or in the context of a scheme of arrangement, if the person or associate is the bidder and the class is in the bid or scheme.
Market makers, client services and the 20% backstop
Under Instrument 2026/482, exclusions will be available for AFS licensees and qualifying foreign equivalent licensees, where derivatives are entered into in the ordinary course of client services, market making or clearing and settlement, including hedging or risk management. In response to feedback, ASIC softened the requirement for licensees to have "adequate systems for the purposes of identifying derivatives", replacing it with an alternative requirement (as suggested in market feedback to ASIC), being to be able to "readily identify" the relevant derivatives.
However, the exclusion is not a blanket safe harbour; a licensee must provide information to the relevant market operator where its holding percentage, calculated without the exclusion, moves above 20% or back to 20% or below, or where it remains above 20% and changes by at least 1 percentage point. The statement will identify the licensee and the reliance on the exclusion, and will quantify the increase that would otherwise arise in the relevant derivative-based and offsetting-short percentages, including the associated number of securities.
For foreign-equivalent licensees, while ASIC acknowledged stakeholder support for the proposed functional approach to extending the exclusion to foreign entities, the concession is limited to entities formed and principally based offshore, authorised by an overseas regulator for the relevant activities, and not holding or required to hold an Australian financial services or CS facility licence.
Register of relevant interests, foreign equivalence and document relief
Listed entities must maintain an index-based register of relevant interests.
The tracing notices regime has broadened, allowing a notice issuer to seek:
- relevant interests, DEIs, offsetting short positions; and
- the agreements or circumstances giving rise to them,
with responses generally due within two business days.
Relevantly, the regime now also captures foreign-incorporated entities listed on Australian financial markets, although Instrument 2026/482 recognises and excludes New Zealand, UK and US entities on the basis that their respective jurisdictions impose disclosure requirements "equivalent" for the statutory foreign-equivalence exclusion.
While market feedback proposed Canada, South Africa and Hong Kong for exclusion as well, ASIC concluded these countries are not "sufficiently equivalent".
What this means for market participants
Bidders and strategic investors. Before building a stake or entering into equity derivative transactions, entities should map their own physical holdings, derivative exposure and short positions, including those of their associates across the corporate group. A derivative may be disclosable even if it does not confer voting rights.
Banks, prime brokers and derivative writers. Ensure positions across trading desks are able to be tracked in aggregate and review client agreements, confirm whether each position falls within an exclusion, and prepare for the 20% backstop. Prime broking and securities lending arrangements remain fact-sensitive, therefore build RG 222 timing and information requirements into workflows.
Listed entities. Prepare the register of relevant interests and develop tracing notice procedures ahead of 4 December 2026. Two-business-day response windows leave limited room to gather information from nominees, custodians and intermediaries on short notice. The new SHN should also be built into the entity’s process for reviewing and publishing notices.
Advisers. Update due diligence questionnaires and transaction timetables to cover derivatives, baskets, indices, ETFs, associates and foreign reporting. For live bids or schemes, test whether relief is available and decide early whether to use the SHN or transitional replacement forms.
Start now. Market participants have a short runway to reconcile position data, test full-notional calculations, document exemption decisions and train deal teams. The six-month form transition is useful, however new filing processes should be embedded before 4 December 2026.
Even with the sharpest of efforts in getting ahead of the new regime, the first few months will no doubt see both market participants and ASIC tackle the practical questions that have not yet been addressed. The market will benefit from further worked examples of complex (yet common) scenarios to which the new regime applies.
Authors: Ben Stewart, Partner; Andrew Kim, Partner; Lucas Ryan, Lawyer and Romany Bailey Brown, Lawyer.
Want to know more?
- Contact the authors or your usual Ashurst Perkins Coie adviser for a practical discussion of how the reforms affect a proposed transaction or portfolio.
- The long and short of it: ASIC consults on disclosure rules for derivative positions
- Derivatives disclosure D-Day – getting ahead of the new regime
