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25 Oct 12
Key changes proposed to continuous disclosure

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On 17 October 2012, ASX released a package of documents relating to a number of proposed changes to the guidance for interpretation of the continuous disclosure provisions in the Listing Rules. Reece Walker, Partner, and Ben Wood, Lawyer in our Corporate Advisory Group recap the proposed changes.

Background

The package has resulted from an ASX and ASIC working group established to advance a joint initiative on better disclosure for investors and to reflect recent legal and market developments.

In particular, the package includes a substantially revised and expanded Guidance Note 8, which was last updated in June 2005.

ASX has confirmed that the new Guidance Note is not intended to fundamentally change its approach to disclosure issues, but is instead aimed at providing additional information and clarity to assist a listed company to understand and comply with its continuous disclosure obligations.

The package also includes an additional shorter guide, targeted specifically at directors and other officers of listed companies, entitled ‘Continuous Disclosure: An Abridged Guide’. 

In conjunction with the new Guidance Note, some amendments have been proposed to the Listing Rules, including Listing Rules 3.1 to 3.1B.

Proposed changes

Some of the key changes are:

  • ASX has sought to clarify that ‘immediately’ does not mean ‘instantaneously’ but rather ‘promptly and without delay’
  • further guidance has been provided on how a listed company can use trading halts to manage continuous disclosure
  • further guidance has been provided on the requirements that need to be satisfied to attract the exception from disclosure under Listing Rule 3.1A. This includes a proposal to reduce the emphasis on the ‘reasonable person test’ and move it to the third and final test in Listing Rule 3.1A
  • in addition to giving further and more detailed examples in Annexure A to the Guidance Note, a new Annexure B and new Annexure C have been included to provide greater guidance on the links between the Listing Rules and the Corporations Act 2001, and on the compliance policies and procedures that a listed company should implement to comply with its obligations, and
  • Listing Rule 3.1B is to be modified to make clear that a listed company must give ASX information it ‘asks for’ rather than information that is ‘necessary’ to correct or prevent a false market.

ASX has also proposed adding a number of additional specific disclosure requirements to Chapter 3, to apply irrespective of any impact the information may have on the price or value of the company’s securities, including notification:

  • of the material terms of any employment, service or consultancy agreement a listed company enters into with its chief executive officer (or equivalent), a director or any other related party (and also any variation to such an agreement)
  • of notices received from security holders calling, or requesting the calling of, or proposing to move a resolution at, a general meeting, or
  • if the listed company declares a dividend or distribution or makes a decision that a dividend or distribution will not be declared.

Next steps

Consultation on the changes is scheduled to end on 30 November 2012, with an aim for the new Guidance Note 8, the Abridged Guide and changes to the Listing Rules to take effect in the first quarter of 2013.

We will keep you informed of developments. In the meantime, if you have further questions about what the proposed changes mean for you, please contact us.

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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