The Australian Securities Exchange has today released long-awaited draft revisions to its “continuous disclosure” rules, following the High Court's decision two weeks ago to clear Fortescue Metals – and mining billionaire Andrew Forrest - of misleading investors and breaking disclosure rules.
Kevin Lewis, ASX's chief compliance officer, said this was the “single most important” guidance note revision that the stock exchange had been working on for the last two years.
But he said the ASX had been waiting until the High Court dismissed the case brought by the corporate regulator against Fortescue Metals.
“We were hoping to get this out at the beginning of the year, but we agreed with the request by [the Australian Securities and Investments Commission] to hold it back until after the High Court decision on Fortescue, in case the court said something significant about the continuous disclosure rules,” Mr Lewis said.
“[But] as it turned out the decision was not as significant as we were all expecting … [so] the guidance note hasn't really changed as a result of Fortescue.”
Among the key changes ASX has proposed to make to rule pertaining to “continuous disclosure”:
1. It will retain the requirement that market sensitive information be disclosed immediately, but it has clarified that “immediately” does not mean “instantaneously,” but rather “promptly and without delay,” making it consistent with judicial authority.
2. There will be greater recognition of the role trading halts perform in managing continuous disclosure issues, including how to deal with the tension between immediate disclosure and “accurate disclosure.”
3. It has confirmed that the “reasonable person” test does not, in general, require that one must disclose when a confidential approach has been made concerning a possible control transaction.
The last time these rules were updated – called Listing Rule Guidance Note 8 – was in 2005. Since then the Australian market has absorbed the James Hardie and Fortescue Metals decisions, the collapse of Centro, and the spurious takeover approach of David Jones by the British-based firm EB Private Equity.
Evie Bruce, a partner at King & Wood Mallesons, said ASX's proposals were “quite sensible” and would help to clarify the ambiguity surrounding continuous disclosure, including what is meant by 'immediate disclosure.”
“There are still many issues and concerns that remain with the structure of Australia's continuous disclosure and enforcement regime, but these were not within the scope of ASX's review of its guidance note and must await further discussion with ASIC and the government,” Mr Bruce said.