Important information for ASX Listed Entities

Closing date for submissions on changes to ASX Corporate Governance Principles - Reminder

The closing date for submissions on the ASX Corporate Governance Council's (Council) Explanatory Paper and Exposure Draft (Consultation Documents) on the Principles of Good Corporate Governance and Best Practice Recommendations is Friday 9 February 2007. 

The Consultation Documents outline Council's proposed changes to the Principles and also include a Consultation Paper which discusses whether Council has a role in relation to "sustainability"/"corporate responsibility" and whether the Principles should include additional reporting requirements in relation to these risks.

Listed entities are encouraged to consider the Consultation Documents and to provide their views which will be considered at Council's next meeting at the end of February 2007. 

Submissions can be sent by email to  regulatorypolicy@asx.com.au or posted to
ASX Regulatory and Public Policy Unit
Level 7
20 Bridge Street
Sydney NSW 2000
Telephone enquiries: 02 9227 0874

The Consultation Documents are available to view on asx.com.au at  http://www.asx.com.au/governance/corporate-governance.htm. 

Continuous Disclosure Obligations - Security Threats and Potential Acts of Terrorism

There has been some media attention on the issue concerning listed entities' disclosure obligations under listing rule 3.1 (PDF 240 KB) when co-operating with government agencies on security related matters.

ASX considers that a listed entity must approach disclosure of security threats and potential acts of terrorism consistent with disclosure of other types of matters under listing rule 3.1. ASX considers that listed entities can address a security threat without being in breach of continuous disclosure obligations by relying on the exception under listing rule 3.1A. As stated in Guidance Note 8 - Continuous Disclosure: Listing Rule 3.1 (PDF 200 KB), the intention of the exception is to protect legitimate commercial interests of listed entities in those circumstances where market integrity is not adversely affected. The exception operates by providing that where all elements are satisfied, the primary disclosure obligation in listing rule 3.1 does not apply to particular information. In this way, it allows an entity to manage the disclosure of that information.

Security threats and potential acts of terrorism are to be considered on a case by case basis. To rely on the exception in listing rule 3.1A, an entity must satisfy all of the three requirements set out in listing rules 3.1A.1, 3.1A.2 and 3.1A.3. The exception only operates while all of the three requirements are satisfied. If one or more of the requirements ceases to be satisfied, the exception no longer applies and the entity must disclose the information immediately. 

In determining whether information concerning a security threat or potential act of terrorism should be disclosed to ASX, an entity must consider its disclosure obligations under listing rule 3.1 and analyse each of the three requirements of the exception. If disclosure is not required at a particular time based on reliance on the exception, the entity must continue to analyse the three requirements of the exception as the circumstances concerning the particular security threat evolve.

A listed entity should also consider the operation of the false market provisions in listing rule 3.1B. In the event that information is in the market that is likely to result in a false market, an obligation may arise on the part of the listed entity to provide information to correct or prevent such a false market. 

It is important that listed entities and security and law enforcement agencies work together to balance the requirements of a listed entity to meet its disclosure obligations against national security interests. Experience has shown that knowledge of continuous disclosure requirements is not uniform across security and law enforcement agencies. For this reason, where a listed entity is in discussions with a government agency regarding these matters, the listed entity should ensure that there is a clear understanding regarding the need for the listed entity to disclose certain information to meet its continuous disclosure obligations, and for each party to consult each other prior to the release of information. Listed entities are also encouraged to establish internal protocols or contacts with relevant security and law enforcement agencies to raise awareness of each parties' obligations and constraints, and to assist the coordination process.

ASX would expect that any information concerning an event which is released by a listed entity would be limited to a factual description of the potential material effect of the event on the listed entity and would not include details or comment on the operational response of government agencies.

In the situation where there is a direct conflict between a listed entity's continuous disclosure obligations and the requirements of a government agency to maintain secrecy over information for the purposes of national security interests or otherwise, a listed entity would need to apply for a trading halt or suspension of its securities under chapter 17 of the listing rules. 

ASX will be liaising with Federal and State Governments to inform them of the need for there to be consultation with a listed entity prior to the disclosure of information relating to an imminent security threat or act of terrorism that relates to the listed entity.