The ASX has pinged fund administrator MainstreamBPO for issuing too many shares.

The market operator said a deal to issue unlisted convertible notes which would convert into ordinary shares broke rule 7.1: that any new issues of ordinary shares need to be approved by shareholders.

The ASX treats any convertible securities as equities from the time they’re issued — even if the note has years before it’s converted — and shareholders have to be given the opportunity to OK the deal.

“ASX acknowledges that this breach was not intentional, that the company believed that the terms of its convertible loan agreement were sufficient to ensure compliance,” MainstreamBPO (ASX:MAI) said.

The company can’t issue any more securities without shareholder approval until March 28, 2018.

ASX data of the 2017 financial year showed that of the 123,705 company announcements released, 103 were responses to ‘aware letters’ asking for details of when a company became aware of material information, and 302 were letters around continuous disclosure issues unrelated to price queries.

It does not keep public data on how many rule breaches occur each year.

MainstreamBPO didn’t say which convertible notes had caught the ASX’s attention, but the only ones it has issued in the last financial year were by a subsidiary for a total of $9 million in September 2016.

The money was intended to fund acquisitions.

In 2017, MainstreamBPO has bought IRESS’ superannuation business for $3.5 million and is in the middle of finalising a $5 million purchase of Trinity Fund Administration in Ireland and the Cayman Islands.

The company has been contacted for comment.

MainstreamBPO’s shares were steady at 54c, valuing it at $53 million. Its shares have traded between 44c and 75c over the past year.

MainstreamBPO reported $29.3 revenue last year, up 56 per cent. Profit was $1.4 million.

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