Issued on : Wednesday 23 August 2000
ASIC & ASX JOIN FORCES FOR BETTER DISCLOSURE BY LISTED COMPANIES The Australian Securities and Investments Commission (ASIC) and the Australian Stock Exchange (ASX) today joined forces to provide listed companies with principles designed to improve investor access to company information. ASIC released the paper “Better Disclosure for Investors” which suggests practical steps companies can take to improve investor access to their information. In conjunction with this ASX announced a review of its guidance note on continuous disclosure under Listing Rule 3.1, which will include reference to the guidance principles. This joint initiative follows the November 1999 release of the ASIC discussion paper “Heard it on the Grapevine..”, which sought comment on how companies could improve investor access to company information and avoid the risks of giving price sensitive information to exclusive groups of analysts before releasing it to the market. ASIC Chairman Alan Cameron said he was pleased “Heard it on the Grapevine…” had stimulated a lively debate on the most effective ways of giving investors access to the type of information needed to make informed investment decisions. “After considering the many submissions sent to us it became apparent that the best way of achieving good corporate disclosure was to address the issue from a number of angles,” Mr Cameron said. “Today’s guidance principles are just one part of a strategy to promote better communication between listed companies and investors.” ASX Managing Director and Chief Executive Officer Richard Humphry said that the guidance principles were a valuable adjunct to the ASX continuous disclosure framework. “The increased direct involvement in the share market of retail investors demands that companies turn their minds to timely disclosure of information to the widest possible audience.” Another way ASIC will tackle the issue of improved disclosure will be to commission a survey later this year of the disclosure practices and attitudes of listed companies. ASIC will review its guidance principles in the light of the survey results. This will take place in the context of ASIC’s existing campaign on disclosure of share dealings by directors of listed companies, and the ASIC/ASX joint surveillance campaign to monitor aspects of listed companies’ compliance with their continuous disclosure obligations under the Corporations Law. Mr Cameron said he was pleased there had been a rapid increase in companies using the internet to communicate with investors since ASIC released “Heard it on the Grapevine”. …/2
ASIC
Australian Securities & Investments Commission
-2“It is clear the leading companies are aware that better investor communication gives them a competitive advantage, and others are now following their lead. ASIC’s role is not just as a regulator, but also to work with companies and industry groups to find ways of encouraging best practice. “We are watching with interest the emergence of a professional association of investor relations managers in Australia. We understand that as an early priority this group intends formulating high standards of company disclosure to all investors, as their United States and Canadian counterparts have done. “ASIC welcomes this development and is also monitoring initiatives by both industry groups and regulators in the United States and Canada.” Key elements of ASIC’s guidance principles are: •= have written policies and procedures on information disclosure that focus on continuous disclosure and improving access to information for all investors; •= have a website on which information is posted as soon as it is disclosed to the market; •= nominate a senior officer to have responsibility for ensuring compliance with continuous disclosure and overseeing and coordinating information disclosure to the stock exchange, analysts, brokers, shareholders, the media and the public. “The principles are not mandatory, they are intended to act as a guide to what ASIC sees as good disclosure practice,” Mr Cameron said. “We encourage companies to adopt the measures flexibly and sensibly to meet legal requirements and their individual needs and circumstances.” “ASX supports this initiative,” Mr Humphry said. “It is totally consistent with the existing ASX focus on the importance of timely and full disclosure to the investment community.” The ASIC guidance principles are available on the ASIC web site on www.asic.gov.au or from the ASIC Infoline on 1300 300 630. For further information contact: Claire Grose Director, ASIC National Markets Unit Tel: (02) 9911 2069
John McMurtrie Executive General Manager, Investors & Companies Australian Stock Exchange Tel: 9227 0444
Issued by: ASIC Media Unit, Irene O’Brien Tel: (02) 9911 2097; Mob: 0411 549 050 ASX Media Unit, Gervase Greene Tel: (02) 9227 0464; Mob: 0419 496 703
Attachment to Better Disclosure for Investors Media Release
How do Australian regulatory standards on disclosure by listed companies compare with those in the United States ? Australia’s continuous disclosure regime requires listed companies to immediately release price sensitive information to the market. Companies must notify the stock exchange immediately they become aware of any information that could reasonably be expected to have a material effect on the company’s share price (except in strictly limited circumstances). The information must not be disclosed to anyone else until the stock exchange has released it to the market. (Section 1001A of the Corporations Law, ASX listing rules 3.1 and 15.7.) Price sensitive information includes information about such things as earnings, mergers, acquisitions, joint ventures, changes in assets, new products or discoveries, developments regarding customers or suppliers (eg winning or losing a contract) and changes in control or management. The regulatory environment in the US is different: disclosure occurs by quarterly reporting and there is no requirement that companies make public disclosure of all material developments as and when they occur. Price sensitive information that comes into existence between quarterly reporting dates need not be released until the next quarterly report falls due. This means that companies may be in possession of significant amounts of price sensitive information of which investors have no knowledge. Until now, companies have been free to discuss this information in closed briefings for selected analysts and institutional investors. The recent United States Regulation FD will require that when companies disclose price sensitive information, they must do so publicly and not selectively, eg by filing with the SEC or issuing a press release. Unintentional disclosures must be released within 24 hours of learning of the disclosure or by start of the next trading day, whichever is later. The focus of Regulation FD is not to create a continuous disclosure regime but to ensure that if material info is disclosed it must be given to the public and industry ‘insiders’ at the same time.
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