David Morris and David Tink discuss new guidance from the Australian Securities Exchange in relation to disclosure requirements of material contracts.
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:
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".
©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.