ASX Policy Update August 2019
Corporate News - 20 August 2019
ASX recently released a compliance update, which includes updated policy regarding potential issues surrounding the use of companies’ continuous disclosure obligations to “ramp” the value of its securities and issues of loyalty securities to disincentivise security holders from selling securities.
Using continuous disclosure obligations to “ramp” the value of securities
ASX has recently seen a number of examples of listed entities making market announcements that look to ASX to be designed to “ramp” the price of their securities rather than to inform the market, particularly in periods immediately prior to, or following, capital raising activities. When releasing market sensitive announcements, listed entities will need to:
- ensure they have a reasonable basis for lodging the announcement in order to comply with their continuous disclosure obligations; and
- be able to identify the information in the announcement that is market sensitive and explain why it is market sensitive.
ASX will require that listed entities release corrective disclosure in the event that the information in the announcement is not market sensitive and may suspend listed entities’ securities from trading until corrective disclosure is released.
Using loyalty securities to disincentivise sales of securities
ASX has also indicated that the issue of loyalty securities by listed entities (such as an issue of bonus options) may disincentivise security holders from selling their securities. In particular, ASX considers that an offer of loyalty securities that is conditional upon a holder retaining securities for a given period is inappropriate for a listed entity. Prior to committing to an issue of loyalty securities, ASX recommends that listed entities first apply to ASX for in-principle advice that the terms of the securities will be consistent with the ASX Listing Rules.
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