On 28 August 2020, the Australian Securities Commission (ASX) released a revised Guidance Note 19 Performance Securities (GN19). 

The revision included a requirement, in certain circumstances, for an independent expert to provide an opinion on whether the issue of the performance shares is fair and reasonable to non-participating security holders.

Independent expert reportsThe criteria for triggering a requirement for an Independent Expert Report (IER) included where the proposed performance shares would result in ordinary shares being issued amounting to more than 10% of the ordinary shares on issue at the date the performance shares are issued or, for an entity applying to being listed, at the date of admission.

The guidance provided to Independent Experts was to assume that the relevant performance milestones have been met and then to assess the impact this would have on the value of the entity. 

Once this value has been derived, the expert is then to consider whether the resulting number of ordinary shares to be issued is fair and reasonable in the circumstances. 

In the last six months, five Independent Expert Reports have been prepared which address the requirements of GN19 with the first one issued by RSM. 

It is likely that the majority of the transactions which necessitated the GN19 IER opinion had been structured prior to the August 2020 release, with negotiations on subsequent transactions being more cognizant of the trigger thresholds.

On 19 March 2021, the ASX released a further revision to GN19 providing specific exceptions to the requirement for in-principle advice and an IER for listed entities.  These exceptions are in relation to an issue of:

  1. independent expert reports“arm’s-length control transactions securities” pursuant to a takeover bid or merger by scheme of arrangement;
  2. “ordinary course of business remuneration securities” as part of the remuneration package under an employee incentive scheme; and
  3. “ordinary course of business acquisition securities” issued by a listed entity under an agreement to acquire an undertaking (including an acquisition of a company as well as assets and businesses) provided the performance milestone is clearly linked to the value of the undertaking being acquired and not to some other measure of value unless the issue is being undertaken in connection with a re-compliance listing.


The above changes significantly limit the requirement for an opinion in accordance with GN19 to primarily new or re-compliance listings where the proposed number of performance securities will trigger the 10% threshold. 

It is worth noting that if the proposed issue of performance securities is to a person/entity in a position of influence then there may still be a requirement under Listing Rule 10.1 for an IER, in which the proposed performance securities would be considered as part of the entire transaction.


If you have any questions regarding Independent Expert Reports for Performance Shares, please get in touch with your nearest RSM office.