ASIC finalises guidance on OFRs

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28 Mar 2013

The Australian Securities and Investments Commission (ASIC) has finalised its regulatory guide around operating and financial reviews (OFRs), which are included in the overall annual report for Australian listed entities. The purpose of the guide is to encourage better communication to shareholders and assist directors of listed entities to understand the OFR requirements.

The release of the new regulatory guide, Regulatory Guide 247 Effective disclosure in an operating and financial review (RG 247), follows the earlier publication of a consultation paper in September 2012. Some of the matters that arose from the consultation process include:

  • Incorporation by reference - constituents believed documents previously made publicly available by entities should be able to be incorporated into the OFR by reference. ASIC has reworked the final regulatory guide to clarify its views, but believes "an OFR allows members to find relevant information on an entity in a single location" and so should not include documents by reference
  • Clarification of terms - the term "investors" has been replaced with "members" to more closely align with the requirements of the Corporations Act 2001
  • Forward looking information - clarifying that legislation "requires there to be a forward-looking element in an OFR extending beyond a period of one year, and, more explicitly, explain that no numerical financial forecasts are expected" and aligning terminology referring to 'material business risks' to be more consistent with ASX Corporate Governance Principles
  • Unreasonable prejudice exemption - better explanation of ASIC's expectations, clarifying that disclosure of commercially sensitive information is not expected, and also clarifying that the proposed internal record keeping guidance is not a legislative requirement
  • Environmental, social and governance (ESG) disclosure and integrated reporting - the guide does not include any requirements around these topics, but does include a reference to ESG risks section of the report
  • Other matters - incorporation of materials from other guide (rather than cross referencing), clarifying that examples included are for illustrative only.

Click for ASIC press release (link to ASIC website).

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