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ASX Listing Rules Update – Continuous Disclosure

ASX Listing Rules Update – Continuous Disclosure

David Morris and David Tink discuss new guidance from the Australian Securities Exchange in relation to disclosure requirements of material contracts.


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The Australian Securities Exchange (ASX) has recently released new guidance on the continuous disclosure requirements in respect of material contracts and forward looking statements as a result of its concerns that the level of disclosure by certain companies regarding contractual arrangements with customers has fallen short of expected standards.

In correspondence issued by the ASX, examples of concerning disclosures included companies:

  • "announcing a contract with a major global customer without providing any details of the nature or substance of the contract or its significance to the entity (i.e. seeking to benefit from the association with the customer without providing proper disclosure)"
  • "announcing what appears to be a material customer contract without disclosing that it is subject to a trial period or other conditions and therefore may not proceed"
  • "disclosing revenue projections for customer contracts that do not have a proper basis or that do not state the material assumptions or qualifications underpinning them"
  • "not disclosing when a previously announced material customer contract is terminated or does not proceed (i.e. disclosing good news but not bad)"
  • "misrepresenting customer contracts as being 'material' or with other superlatives when plainly they are not (one of the more notable examples being a listed entity that disclosed a "material commercial agreement with a leading financial entity" under which it was to receive less than $1000 in revenue)".

In the correspondence ASX advised that in situations where it detects the sort of behaviour identified above, it "will not hesitate to suspend the entity, query it and require it to correct any inadequate or misleading disclosures. It will also refer the entity to ASIC for consideration of regulatory action".

As a result of these concerns ASX has updated ASX Guidance Note 8 - Continuous Disclosure: Listing Rules 3.1 – 3.1B to provide additional guidance to ASX companies in relation to the disclosure requirements in respect of material contracts.

The key message from ASX in the revised guidance note is that "wherever possible, an announcement under Listing Rule 3.1 should contain sufficient detail for investors or their professional advisers to understand its ramifications and to assess its impact on the price or value of the entity’s securities".

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