Canadian Companies Listing Down Under: Evolving Liability Considerations for ASX Secondary Listings

For publicly traded Canadian companies considering or maintaining a secondary listing on the Australian Securities Exchange (ASX), the Australian securities litigation environment presents a materially different and, in many aspects, a heightened risk profile for publicly traded companies on a Canadian exchange. These differences have direct implications for the personal liability exposure directors and officers face, therefore impacting companies D&O liability insurance program structures, limits adequacy, and their total cost of risk.

In recent years, Canadian publicly traded companies particularly in the mining and energy sectors have increasingly pursued secondary listings on the Australian Securities Exchange (ASX). This reflects similarities in the Canadian and Australian investor bases, both of which have strong institutional demand for these sectors. An ASX listing can provide access to Australian pension‑fund capital, potentially improving share liquidity and valuation. These investors are also experienced sector participants and can serve as long-term partners for management teams seeking a stable shareholder base.

With this trend in mind, it is imperative that directors and officers of Canadian public companies, risk managers and risk advisors fully comprehend how the Australian securities litigation and regulatory landscape contrasts with Canada’s, and how those differences translate into heightened D&O liability exposure.

Securities litigation has historically been a significant driver of losses for insurance companies that provide public D&O liability insurance. As a result, D&O insurers closely monitor securities class action (SCA) lawsuit filing trends to assess both current and future loss assumptions. While SCA litigation is only one of several factors considered in underwriting public D&O programs, it remains the most consequential driver of large losses. For the purposes of this article, the focus is exclusively on securities class actions.

When evaluating SCA exposure, D&O insurers generally consider two key dimensions: frequency and severity. While both influence overall loss potential, they affect D&O programs in different ways; ultimately shaping premiums, retentions, capacity deployment, and policy terms and conditions.

The table below summarizes publicly available SCA data from 2016–2025 across Canada, Australia, and the United States, adjusted for inflation.

• Canada exhibits the lowest SCA frequency and settlement severity among the three jurisdictions.
• Australia shows materially higher filing frequency than Canada and settlement severity comparable to and in some measures exceeding the United States.
• The United States remains the most litigious jurisdiction by filing volume, with greater dispersion driven by occasional outsized settlements.

From a frequency perspective, ASX‑listed companies are approximately two and a half times more likely to face a SCA lawsuit than companies listed only on the TSX or TSX Venture Exchange. While U.S.‑listed companies are nearly six times more likely to face a SCA than ASX‑listed companies, median (not average) settlement values in Australia are over two times greater than observed in the United States. Therefore, although the U.S. experiences more headline‑grabbing mega settlements which is reflected in a higher average (mean) settlement value, Australian SCAs seem more probable to settle at higher levels than in the U.S.

In summary, Canada presents the lowest securities class action litigation risk profile, Australia occupies a middle ground on frequency but exhibits elevated severity, and the United States remains the most challenging jurisdiction when factoring both filing volume and settlement characteristics.

Litigation Funding: A Structural Difference

Australia has a long‑established and highly developed litigation funding industry. By contrast, litigation funding in Canada remains comparatively nascent, having historically been restricted under common‑law doctrines and its use today continues to face greater judicial scrutiny than in Australia.

In Australia, third‑party litigation funders typically cover all legal fees, expert costs, adverse costs, and defendant legal fees in unsuccessful cases, effectively eliminating downside risk for plaintiffs. While lawyer contingency fee arrangements are available in Canada, plaintiffs may still bear some expenses that would typically be covered by a third-party litigation funder. In Australia, the prohibition on contingency fees (with limited exceptions such as Victoria’s Group Cost Orders) has further entrenched litigation funding as the dominant financing model for class action lawsuits. These litigation funders are very well resourced and are therefore able to hire the most qualified plaintiff's attorneys and expert witnesses to improve their probability of a successful outcome.

Damages Caps and Class Certification

Canadian provinces have largely adopted secondary market civil liability regimes modeled on Bill 198 (Budget Measures Act, 2002) which introduced Part XXIII.1 of the Ontario Securities Act. These various provincial securities regimes typically impose statutory damages caps (not applicable for proven fraud). For example, a securities class action (SCA) lawsuit based on secondary market liability in Ontario is subject to a damages cap being the greater of CAD $1 million or 5% of market capitalization. Thus, directly constraining potential settlement values absent proven fraud. Australia has no similar cap on damages for secondary market civil liability.

In addition, Canada requires judicial certification before a class action may proceed, creating a meaningful procedural gateway for defendants to meet. Meanwhile, Australia imposes no such formal certification requirement; class actions may commence once minimal statutory thresholds are met, placing the burden on defendants to seek discontinuance or dismissal.

Reliance, Causation, and Defence Costs

Canadian securities statutes generally deem plaintiffs' reliance on misrepresentation or omission to have occurred once plaintiffs acquire or dispose of securities during the class period. Australian law does not codify reliance however, leading courts to adopt market‑based causation principles instead. While this can substantively benefit defendants, plaintiffs must establish causation and loss through expert economic analysis. In practice, this often can result in higher defence costs and longer litigation timelines.

Continuous Disclosure and the 2021 Reforms

Historically, one of the most significant drivers of elevated Australian securities risk compared to other jurisdictions was their strict liability standard applied to continuous disclosure obligations under the Corporations Act 2001 (Cth). Plaintiffs were not required to prove a fault element, materially strengthening plaintiffs' claims and increasing settlement leverage.

In August 2021, Australia enacted the Treasury Laws Amendment (2021 Measures No.1) Bill, introducing a fault or intent requirement for civil continuous disclosure claims. This better aligns with other jurisdictions such as Canada which has partially helped improve the SCA litigation environment in Australia. However, it did not eliminate securities class action risk altogether. Instead, risk has shifted toward more complex, expert‑driven litigation focused on proving causation and loss.

The Current Australian SCA Landscape

Recent years have seen notable developments in Australian securities litigation. Filing activity has moderated following six consecutive defence wins at trial since 2019. Two high‑profile matters—Zonia Holdings Pty Ltd v Commonwealth Bank of Australia (CBA) and Crowley v Worley Ltd—remain unresolved and have contributed to uncertainty among litigation funders.

In the CBA case, the Full Federal Court overturned findings on disclosure breaches but concluded that causation and loss were not established. Similar challenges arose in other recent cases, prompting debate over the effectiveness of event studies in proving loss. The High Court is currently considering a special leave application, with a decision expected in the second half of 2026. The Worley appeal decision is also expected in 2026. Until these issues are resolved, securities class action (SCA) filings may remain subdued.

Implications for Canadian Companies and Their Boards

For Canadian public companies pursuing a secondary ASX listing, the implications are clear: directors and officers face a heightened level of personal liability risk. Boards and executives should review D&O indemnification agreements, which serve as the first line of defense for protecting personal assets.

Robust D&O liability insurance is essential to supplement indemnification. Companies with existing D&O insurance programs should reassess limits, retentions, and structure (adequacy of Side A protection for non-indemnifiable exposure) to ensure it is sufficient given higher Australian settlement benchmarks; additional limits may be required. Please contact your licensed insurance broker to ensure you have appropriate protection.