Russell Aboud and Shane Finemore resigned their positions on 19 September after US-based Manikay Partners (founded by Mr Finemore and chaired by Mr Aboud) was fined by the Securities and Exchange Commission (SEC) for breaching short-selling rules in 2009.
Speaking at the ASX annual general meeting (AGM) yesterday, Mr Holliday-Smith said he was made aware of the matter when his company issued its Notice of Meeting for the AGM on 26 August.
“I was advised that the SEC matter was confidential and not yet resolved. I took legal advice, which I followed,” he said.
“It was clear the matter could not be properly considered by the board until the SEC process was understood and the confidentiality issues were resolved.”
Following the SEC’s announcement on 17 September, Mr Aboud and Mr Finemore consulted with Mr Holliday-Smith and informed him of their intention to resign their positions because they they did not want any reputational issues for the ASX to arise.
Mr Holliday-Smith said the ASX board “did consider and understand the issue” of having two directors linked to one organisation. He pointed out that Mr Aboud and Mr Finemore went into business together after they joined the ASX board.
“The board carefully considered the individual strengths they brought to ASX and the recent contributions each had made. A decision was made to keep both on the board and recommend the re-election of Shane Finemore,” said Mr Holliday-Smith.
But the events of last week created a “somewhat complicated situation”.
“It was clear to me that each would make ASX’s interests and public standing their first priority,” he said. “This is exactly what they did by resigning, once the SEC outcome became final and public.”
The ASX chairman acknowledged that his own intentions and the length of his service were queried last week.
“When I was asked to become chairman of ASX, I indicated that I preferred to serve for at least two terms as chairman, subject to the ongoing support of the board and shareholders. I have not changed my position but recognise it is, and will be, subject to continual review,” he said.
The ASX plans to introduce new directors to replace Mr Finemore and Mr Aboud in the coming months.
Mr Finemore did not stand for re-election at yesterday's AGM, and Dr Ken Henry was elected to the board.
