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ASX shareholder seeks court approval to sue former directors over CHESS project

Created at 12 Aug · 1:10 AM1 source↑ Market-relevant
IN SHORT

A shareholder plans to seek court approval to sue former officers and directors of the Australian Securities Exchange (ASX) over the company's abandoned CHESS blockchain project. The shareholder alleges breaches of duty related to the project's failure.

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Key Numbers

2.5%ASX shares intraday decline
A$55.68ASX share price
July 3Date of previous biggest intraday decline
2001Corporations Act year

Who's Involved

ASX
Australian securities exchange operator
Rosherville
Shareholder planning legal action
former officers and directors
Accused of breaching duties related to CHESS project
ASX shareholder seeks court approval to sue former directors over CHESS project

↳ Why This Matters

This development highlights potential governance failures and financial repercussions for the ASX stemming from the costly abandonment of its CHESS replacement project, impacting investor confidence and the company's reputation.

Key facts

  • A shareholder, Rosherville, intends to seek court approval to sue former ASX directors and officers.
  • The legal action concerns the abandoned blockchain-based CHESS clearing and settlement project.
  • The shareholder alleges breaches of duty by the former directors and officers.
  • The CHESS project was paused in November 2022 due to design and delivery issues.
  • ASX stated there are no allegations against the exchange itself.

    • The Australian Securities Exchange (ASX) announced that a shareholder, Rosherville, intends to seek court approval to initiate a statutory derivative action against certain former officers and directors. This legal move stems from allegations of breaches of duty concerning the company's failed blockchain-based Clearing House Electronic Subregister System (CHESS) project.

    Under Australia's Corporations Act 2001, a statutory derivative action allows a shareholder to bring legal proceedings on behalf of a company if the company itself is unlikely to do so, requiring court leave. ASX clarified that there are no allegations against the exchange itself.

    The CHESS replacement project, aimed at modernizing Australia's share settlement system, was halted in November 2022 following an independent review that identified significant issues with its design and delivery. ASX subsequently abandoned the original blockchain approach and is developing a new replacement plan.

    Following the announcement, shares of the bourse operator fell as much as 2.5% to A$55.68, marking their largest intraday decline since July 3.

    Frequently asked questions

    The CHESS project was intended to modernize Australia's share clearing and settlement system using blockchain technology.

    An independent review found significant issues with its design and delivery, leading to its pause in November 2022 and subsequent abandonment of the blockchain approach.

    It is a legal proceeding under the Corporations Act 2001 that allows an eligible shareholder to bring a case on behalf of a company when the company is unlikely to do so itself, requiring court approval.

    No, ASX stated that there are no allegations against the exchange itself.

    What Happens Next

    01ASX will update the market on further developments.
    02The shareholder will seek court approval to proceed with the legal action.

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    How It Developed

    A shareholder plans to seek court approval for a derivative action against former ASX officers and directors.
    The shareholder alleges breaches of duty related to the CHESS blockchain project.
    The CHESS replacement project was paused in November 2022 and later abandoned.
    ASX shares fell as much as 2.5% following the announcement.

    Sources

    T1
    ASX shareholder plans to seek court approval to sue former directors over CHESS projectReuters

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