Ceretas Limited Enforces Robust Securities Trading Policy to Combat Insider Trading Risks

Scope and Application of Ceretas Limited's Securities Trading Restrictions

Ceretas Limited (ACN 681 662 224), trading under ASX code CTS, has enacted a detailed Securities Trading Policy covering its entire organisational structure. The policy broadly defines "Restricted Persons" to include all directors, officers, employees, contractors, and consultants engaged by the company, ensuring uniform application of insider trading prohibitions across all levels—from executive management to external advisors and service providers. It also extends restrictions to connected persons such as spouses, partners, dependent children, controlled corporate entities, and trusts where restricted persons hold beneficial interests or wield significant influence.

This governance framework recognises insider trading as a serious criminal offence under Australian securities law, carrying severe penalties including imprisonment. By applying the policy broadly, Ceretas Limited underscores its commitment to a robust compliance infrastructure. The approach acknowledges that material information flows across multiple stakeholder groups, necessitating clear protocols for all individuals with access to sensitive data. This comprehensive coverage aligns with best practices in corporate governance and regulatory expectations under the ASX Listing Rules.

Insider Trading Prohibition Aligned with the Corporations Act

The Securities Trading Policy enforces prohibitions that reflect statutory requirements under the Corporations Act 2001 (Cth). Restricted Persons are explicitly barred from subscribing for, purchasing, or selling company securities—or entering agreements to do so—while in possession of information that a reasonable person would expect to materially affect security price or value. This restriction applies whether trading is conducted personally or as an agent for another party. Furthermore, restricted persons must not induce others to trade in company securities when holding such material non-public information.

The policy applies a two-pronged test to determine if information triggers the prohibition: first, whether a reasonable person would expect the information to materially affect security price or influence trading decisions; second, whether the restricted person knows or should reasonably know the information is not publicly available and could impact security value if disclosed. Annexure A of the policy provides examples of price-sensitive information to guide restricted persons. Additionally, the policy prohibits passing material non-public information to others likely to trade on it.

Designated Closed Periods Tied to Financial Reporting

Ceretas Limited enforces mandatory closed periods during which restricted persons are prohibited from trading company securities regardless of possession of material non-public information. The first closed period surrounds quarterly reports, banning trading one week before and one day after each quarterly release. The second applies to half-yearly reports, with a two-week prohibition before and one day after publication.

The annual reporting cycle triggers the strictest closed period: two weeks before and one day after the annual report release. These intervals align with market norms recognizing that financial disclosures often contain material information affecting investment decisions. Beyond scheduled periods, the Board may impose additional closed periods as deemed necessary. The policy also includes an "Additional Period" for situations where the company contemplates disclosures qualifying for deferral under ASX Listing Rule 3.1A, maintaining trading prohibitions unless exceptional circumstances and prior written approval exist.

Prior Written Clearance and Approval Process

Regardless of timing, Ceretas Limited requires restricted persons to obtain prior written clearance before trading company securities. The policy outlines a hierarchical approval system: employees must seek clearance from the Managing Director or equivalent, with the Chairperson acting as alternate in their absence. Directors and officers must obtain approval from the Chairperson or, if unavailable, the Managing Director. The Managing Director must get clearance from the Chairperson, who in turn must seek approval from the Managing Director.

Contractors and consultants must also secure clearance from the Managing Director or equivalent. Clearance requests are submitted in writing via a formal request form (Annexure B, "Request for prior written clearance to trade in securities") and can be delivered in person, by mail, or email. Approved clearance is valid for five business days unless otherwise specified, with expiry details documented in the clearance notice. This structured process ensures documented oversight by senior management or board members and creates an audit trail.

Exceptional Circumstances Allowing Trading During Prohibited Periods

The policy acknowledges that absolute trading bans during closed periods could cause undue hardship in rare cases. Consequently, it permits trading within prohibited periods if prior written clearance is obtained under exceptional circumstances. One category covers severe financial hardship, provided the approving officer confirms the individual does not hold unpublished price-sensitive information. This provision addresses situations where illiquidity during closed periods would cause significant personal financial distress.

A second discretionary category allows trading when the approving officer determines the individual lacks unpublished price-sensitive information and that other exceptional factors justify an exception. The third category permits trading to comply with legal or regulatory mandates, such as court orders or enforceable undertakings. In all cases, clearance depends on the approving officer’s satisfaction that no material non-public information is held.

Exemptions from Policy Trading Restrictions

While the policy broadly restricts trading by restricted persons, certain transactions are exempt as detailed in section 6 of the formal policy. Typical exemptions include automatic dividend reinvestment plan transactions where prior participation was elected, share purchase plan transactions under company-sponsored schemes established before trading windows, and other specified transactions meeting defined criteria.

These carve-outs reflect market practices and regulatory guidance acknowledging that some dealings pose minimal insider trading risk. However, restricted persons must remain mindful that even exempt transactions are subject to insider trading prohibitions under the Corporations Act. The policy stresses that absence of a prohibited period does not authorize trading if material non-public information is held, and clearance may still be required.

Derivatives and Long-Term Trading Arrangements

The policy extends to derivative instruments such as options and warrants, recognizing these products carry similar insider trading risks as direct equity trades. Section 7 addresses derivative trading, preventing restricted persons from circumventing insider trading rules via derivatives.

Section 8 covers long-term trading plans or broker-arranged programs designed to execute trades over extended periods. Such arrangements, often called trading plans or systematic sale programs, can mitigate perceptions of information-driven trading but do not automatically exempt participants from insider trading liability, especially if plans are modified based on material non-public information.

Prohibited Transactions and Price-Sensitive Information Examples

Section 9 identifies prohibited transactions including short selling, which involves selling shares not owned and later purchasing them to settle. Short selling presents insider trading risks if based on material negative non-public information. The policy also bans hedging strategies like put options and collars that shield downside risk while retaining upside, which could conflict with insider trading rules.

Annexure A lists illustrative examples of price-sensitive information, such as acquisition or merger negotiations, significant litigation outcomes, major contract wins or losses, changes in senior management, material financial condition changes, regulatory issues, operational developments in mining or exploration, and capital raising activities. These examples educate restricted persons on developments requiring cautious trading consideration.

Notification Obligations and Breach Implications

Section 10 mandates that restricted persons notify designated officers of trades conducted under the policy, enabling the company to maintain compliance records and monitor for unusual trading patterns.

Section 11 outlines consequences for policy breaches, ranging from warnings to termination of employment or engagement. Serious or repeated violations may lead to referrals to ASIC, with potential civil penalties or criminal prosecution under the Corporations Act. The policy underscores that breaches carry significant legal and financial risks beyond internal disciplinary measures.

Compliance with ASX Listing Rules and Policy Enforcement

Section 12 confirms Ceretas Limited’s commitment to fulfilling ASX Listing Rules related to director and officer share trading, including mandated trading policies, restricted trading periods, and disclosure obligations. The policy’s broad application to all employees and contractors exceeds minimum regulatory requirements, reflecting the company’s dedication to comprehensive insider trading prevention.

Overall, Ceretas Limited’s Securities Trading Policy establishes a rigorous governance framework to prevent insider trading, ensure regulatory compliance, and protect investors. By defining clear prohibitions, closed periods, clearance protocols, and documentation standards, the company fosters market integrity and informed investment decisions. The policy’s success depends on restricted persons understanding their responsibilities, obtaining proper clearance before trading, and maintaining vigilance regarding material non-public information. This framework demonstrates to ASX, ASIC, and market participants that Ceretas Limited upholds stringent controls to deter insider trading and support capital market confidence.