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General Issue

Margin Loans, Insider Trading and Disclosure Obligations: A Study of the Securities Trading Policies of the ASX 100

Author

Juliette Overland

Complex legal issues arise when listed company personnel enter margin loans over company securities. Does insider trading occur on a forced sale of company securities if the borrower possesses inside information? If a material number of company securities may be subject to a forced sale, must the listed company disclose it to the market? Are company personnel obliged to inform a listed company they have a margin loan over company securities? There is significant variation in the manner in which listed companies address these issues, which include applying prohibitions, requiring approvals, and obliging notifications. This article undertakes a detailed study of the securities trading polices of the ASX 100 to analyse the ways in which listed companies treat margin loans over company securities. This article proposes law reform and the development of ‘best practice’ recommendations for the treatment of margin loans in the securities trading policies of listed companies.

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