Australian Securities Exchange (ASX) consults on update to continuous disclosure guidance

ASX has responded to the call of listed entities and advisers for greater clarity and guidance on continuous disclosure obligations by addressing issues which have continued to cause concern and which have not been resolved by Fortescue or other continuous disclosure regulatory actions.  The draft now being consulted on is a rewrite of the former Guidance Note 8 and covers substantial new ground.  In guidance with which ASIC is in broad agreement, ASX seeks to assist those involved in ECM and other transactions as well as in day-to-day compliance. 

Continuous disclosure compliance in a prospective capital raising context raises two specific types of concern:

• Leaks of information which result in a requirement for early disclosure can damage a prospective raising, particularly its pricing, and in some cases the viability of the listed entity;
• Alleged breach of the rules at any time during the course of the capital raising process can risk triggering of an underwriting condition, ability to rely on short form prospectus disclosure, pricing, reputation and ability to conduct the raising successfully.

Like the context of potential M&A transactions, the risks and stakes are high for listed entities in determining if, when and what to disclose in relation to a developing capital raising proposal.

Key assistance of a general nature is proffered by ASX:

• confirming that, in the absence of leaks, a transaction will ordinarily only become announceable when ‘signed up’,
• confirming that the requirement for disclosure to occur ‘immediately’ means ‘promptly and without delay’ rather than ‘instantaneously’, and that the required timing will depend on the circumstances – helpfully, ASX specifically acknowledges that where the market is closed, either outside trading hours or because of a trading halt or suspension, greater latitude is allowed, and
• indicating a greater willingness to offer trading halts as a tool to prevent false markets and facilitate drafting of releases in the context of leaks.

To read our full briefing, click here.  For our video brief, ASX continuous disclosure guidance released, click here.