ASIC Commissioner comments on continuous disclosure

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10 Dec 2012

In a recent speech at the Chartered Secretaries Australia (CSA) 2012 Annual Conference, John Price, (Commissioner, Australian Securities and Investments Commission, ASIC) has spoken about continuous disclosure, including ASIC's priorities and the recent proposals from the Australian Securities Exchange (ASX) to rewrite its guidance note on the topic.

Noting that "ASIC sees continuous disclosure by listed companies as a bedrock of market integrity", Mr Price went on to comment on the "misconception that continuous disclosure is something done on a purely reactive basis and in an hour or so" before exploring ASX's proposed Guidance Note GN 8 Continuous disclosure: Listing Rules 3.1–3.1B (GN 8) in more detail.

Mr Price outlined the following key messages about continuous disclosure:

  • Companies need to be prepared to act quickly to respond to continuous disclosure issues, by having established policies and practices.
  • If the company can’t act quickly (e.g. if board approval of an announcement is required), you should consider whether to request a trading halt.
  • It is important for companies to know what information about them the market is trading on. This may require monitoring of major sources of news and information, which in some cases will include significant social media sites. They should also be aware of how their company’s shares are trading.
  • Good practice when making an announcement is not to assume the reader is sophisticated or leave readers to read between the lines. Companies need to highlight key information and tell it as it is – for instance, don’t describe a scheme of arrangement proposal using takeover bid language.
  • Be careful in the headings for the announcement – try to encapsulate the tenor of message there. Headings are often the things that will get reported in the media.
  • Apply the listing rule requirements consistently, whether it is good or bad news required to be disclosed.
  • If an announcement proves to have been wrong, it may be necessary to update the market to ensure the market is fully informed of material information.

Mr Price then when on to outline the two issues that should be focused upon in designing a continuous disclosure compliance system:

  • the importance of having adequate systems in place, especially in the age of social media
  • the need for companies to know what, how and when to disclose.

Click for full text of the speech (link to ASIC website).

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