Amendments to Continuous Disclosure Rules
Corporate News - 28 May 2020
Earlier this week the Treasury announced changes to the continuous disclosure provisions of the Corporations Act 2001 (Cth) (Act) to encourage listed entities to continue to disclose information to the market during COVID-19 by modifying the circumstances in which non-disclosure will give rise to liability. The amendments have been made pursuant to the Corporations (Coronavirus Economic Response) Determination (No. 2) 2020 (Determination) and will remain in force for a period of six months from 26 May 2020.
In short, the Determination amends the civil penalty provisions under the Act so that companies and their officers will only be liable where the entity knows or is reckless or negligent with respect to whether the information would, if it were generally available, have a material effect on the price or value of the securities. This modifies the previous objective “reasonable person” test and is an acknowledgement of the challenges associated with knowing whether a given piece of information will have a material effect on the price or value of the entity’s securities.
It is important to note, however, that the Determination provides relief for non-disclosure only. Potential liability remains for misleading and deceptive conduct in relation to disclosures that are actually made to the market. In addition, listed entities must still comply with the obligation under ASX Listing Rule 3.1 to immediately disclose information that a reasonable person would expect to have a material effect on the price or value of the entity’s securities.
Listed entities requiring advice on continuous disclosure obligations should contact us in our Perth office on +61 8 9321 4000 or our Melbourne office on +61 3 9111 9400 for further details.