Following closely on the heels of the High Court's recent
decision in Forrest
v ASIC, ASX announced on 17 October 2012 the release for
consultation of a new draft Guidance Note 8 on continuous
disclosure. Guidance Note 8 was last updated in June 2005.
The draft revisions to Guidance Note 8 seek to provide
additional information and transparency in a number of areas.
Clarification that 'immediately' does not mean
Currently Listing Rule 3.1 provides that market sensitive
information must be disclosed to ASX immediately.
'Immediately' has previously been taken to mean
'instantaneously'. Under the draft revisions, ASX's
view is that the requirement to release market sensitive
information immediately is satisfied if the information is
disclosed 'promptly and without delay'.
While ASX recognises that the speed that notice can be given to
the market will vary according to the circumstances, ASX continues
to urge companies to promptly utilise a trading halt where market
sensitive information cannot be released to the market
Incomplete proposals or negotiations
One of the exceptions to the requirement to immediately disclose
information that may be market sensitive is an incomplete proposal
or negotiation (listing rule 3.1A.1). ASX has given additional
guidance around when a proposal or negotiation is incomplete.
A proposal is incomplete unless and until the entity has
adopted it and is committed to proceeding with it.
Negotiations are incomplete unless and until the entity has
entered into a legally binding agreement or the entity is committed
to proceeding with the transaction being negotiated.
However, ASX specifically brings listed entities' attention
to the difference between the situation in which board approval is
required for the entity to be committed to a market sensitive
proposal, and where the entity is already committed to a market
sensitive proposal and the board is simply noting the decision. The
former situation will need to be announced immediately upon the
board making the decision, and the latter will need to be announced
immediately upon the entity becoming committed to proceeding with
ASX has moved away from previous guidance in which an entity was
expected to disclose a material difference in its earnings from
earnings guidance previously given to the market, or where no
guidance had been provided, from consensus analyst estimates or
previous corresponding period results.
Entities will now need to consider whether a difference in its
earnings will have a material effect on the price or value of an
entity's securities, and if so, provide disclosure to the
market. This change (if adopted) will be particularly significant
for companies that do not routinely give guidance to the
ASIC has welcomed ASX's updated continuous disclosure rules
and guidance and urged the business community to have their say on
the proposed guidelines.
ASX will conduct a national roadshow for the listed community
and will be undertaking consultation with key stakeholders over the
coming months. Industry comments and feedback is sought on the
consultation materials, with submissions due to ASX by Friday, 30
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guide to the subject matter. Specialist advice should be sought
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