Continuous disclosure is often a vexed issue for entities listed
on ASX. It can be difficult to decide what, when and how to
disclose to the market in accordance with Listing Rule 3.1. To help
listed entities meet their obligations, the ASX has rewritten
Guidance Note 8, and has also provided a summary - click
here to view.
The Guidance Note is effective today, 1 May 2013.
Why has ASX revised Guidance Note 8?
ASX regards Listing Rule 3.1 as one of the most important
Listing Rules, essential to maintaining fair and efficient markets.
Guidance Note 8 has been revised to provide additional practical
advice for listed entities, directors and their advisors on their
continuous disclosure obligations.
Clarification of the meaning of
The requirement that market sensitive information be disclosed
"immediately" has not changed.
However, what this means in practice is now clearer. ASX
interprets "immediately" to mean "promptly and
without delay". A listed entity must disclose market sensitive
information to the market as quickly as it can in the circumstances
and must not defer, postpone or put the disclosure off to a later
This requires a listed entity to have effective systems in place
to ensure that market sensitive information which comes into the
possession of its officers is promptly analysed and, if it must be
disclosed, that it is promptly given to ASX or a trading halt is
Greater emphasis on trading
ASX provides greater recognition to the role that trading halts
can perform in signalling to the market that market sensitive
information will be released.
ASX emphasises the value of a trading halt in allowing an entity
time to gain internal sign-off on significant announcements, or to
properly assess the impact of new developments affecting the
Responding to market rumours and loss of
A listed entity should be prepared to deal with leaks and market
speculation. Although it can rely on exceptions to disclosure for a
confidential and incomplete matter (such as a transaction in the
early stages of negotiation), it should monitor:
major national and local newspapers
the market price of its securities and the securities of any
other listed entity involved in the transaction
enquiries from journalists or analysts
comments on social media.
The entity should have a draft letter to ASX requesting a
trading halt and a draft announcement about the negotiations ready
to send to ASX to cater for the eventuality that the disclosure
exception no longer applies.
Considering the expecations of the
One of the essential grounds for withholding disclosure is that
a reasonable person would not expect it.
The ASX considers that if information is confidential and falls
within one of the specific exceptions in Listing Rule 3.1A.1 (such
as information generated for internal management purposes), then it
will normally also satisfy the "reasonable person"
However in limited circumstances, a reasonable person would
still expect disclosure – for example where entities
"cherry pick" the news that they disclose (for example
positive results in clinical trials, where there have also been
negatives), and additional information must be disclosed to clarify
the selective disclosure.
An entity must consider if it has a legal obligation to notify
the market ahead of the release of formal financial reports where
it becomes aware that its earnings will differ materially from
market expectations. ASX confirms that the best guides for this
any published earnings guidance by the entity
earnings forecast by sell-side analysts
the entity's earnings for the prior corresponding
What does it mean?
The fundamentals of continuous disclosure remain – market
sensitive information must be disclosed immediately and truthfully,
subject to limited exceptions.
Listed entities should refresh their processes for:
signing off on market disclosures
using trading halts to manage the competing demands of quick
disclosure and of ensuring that the disclosure is complete and
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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