Substantial holder notices and director trades on the NZX and ASX

Who is buying and selling a company's shares can be as revealing as what the company says. On both the NZX and ASX, large shareholders and directors must disclose their trades publicly. Here's how to read those notices.

Substantial holder notices

The rules

In both New Zealand and Australia:

• An investor holding 5% or more of a listed company's voting shares is a substantial holder and must disclose it.
• Once substantial, they must disclose any movement of 1% or more (for example, from 6.2% to 7.4%).
• They must also disclose when they cease to be a substantial holder (falling below 5%).
• Notices are generally due within two business days (in Australia, earlier during a takeover bid).

In New Zealand these notices fall under the Financial Markets Conduct Act; in Australia, the Corporations Act. Either way, they're released through the exchange's announcements platform, so they appear alongside other company announcements.

How to read one

A notice typically shows:

• Who the holder is, often a fund manager, super fund or strategic investor, and any associates.
• Before and after holdings, in shares and percentage.
• Dates and prices of trades (sometimes a schedule of many small trades).
• The nature of the interest: owning shares outright, having the power to control voting, or holding derivatives.

What it can signal

• A new substantial holder can signal growing institutional conviction, or a strategic investor positioning for a possible takeover.
• A steadily rising stake from one holder over months can be a sign of accumulation.
• A large holder selling down can weigh on the share price while they're selling, and clear the overhang once they're done.
• Index funds often appear as substantial holders in large companies. Their changes usually reflect index flows, not a view on the company.

Director and insider trades

The rules

Directors must disclose changes in their interests in their company's shares:

• ASX: companies lodge an Appendix 3Y (change of director's interest notice), generally within five business days of the change.
• NZX: directors and senior managers file an ongoing disclosure notice, generally within five business days of the trade.

Companies also have trading windows and blackout periods, usually around results, when directors can't trade. That's why director trades cluster in the weeks after results.

Reading insider trades

Not all insider trades mean the same thing:

• On-market purchases with the director's own money are the most meaningful. They're choosing to add risk at the current price.
• Sales are less informative. Directors sell for many reasons: tax, diversification, a house. Large or repeated selling by several directors is worth more attention.
• Option exercises, share plans and DRP shares are usually routine.
• Cluster buying, where several directors buy within a short period, is a stronger signal than one director buying.

Academic research in several markets has found that insider purchases, on average, have some predictive value for future returns, while sales have much less. It's a useful input, not a guarantee.

Combining the signals

The most informative picture comes from putting these together:

• Directors buying while short sellers are building positions shows a clear disagreement. Watch which side the next result supports. See ASX short selling reports.
• A new strategic substantial holder in a beaten-down company can come before corporate activity.
• Directors selling after a guidance upgrade may suggest they think the good news is priced in.

Tasman Desk collects substantial holder and director dealing notices from NZX and ASX announcements and shows them on the Outlook page alongside short-selling moves, so these signals sit in one place.

Frequently asked questions

What is a substantial holder?

An investor holding 5% or more of a listed company's voting shares. They must disclose their holding, any change of 1% or more, and when they fall below 5%.

How quickly must substantial holder notices be released?

Generally within two business days of the change in both New Zealand and Australia, with shorter deadlines in Australia during a takeover bid.

What is an Appendix 3Y?

It's the ASX form a company lodges to disclose a change in a director's interest in its shares, generally within five business days.

Is director buying a good sign?

On-market purchases with personal money can signal that a director believes the shares are undervalued, and research suggests insider buying has some predictive value on average. It's not a guarantee; use it alongside other research.

Where can I find director trades for NZX companies?

They're published as ongoing disclosure notices on the NZX announcements platform for the company concerned.