Updated ASX guidance: when you can withhold a counterparty’s name

ASX previously allowed a counterparty not to be named in an announcement to ASX only in very limited circumstances and contexts, where the counterparty had ‘strong and legitimate reasons’ for not wanting to be named. In that case, the announcement was required at least to include a description of the counterparty that was detailed enough to indicate the counterparty’s standing and creditworthiness.

The Compliance Update recognises that there may be other cases where a listed entity may not want to disclose a counterparty’s name in its announcement – such as where the identity of the counterparty to a market sensitive contract may be commercially sensitive information, or the listed entity believes it’s not market sensitive information.

ASX has slightly broadened its position and will now accept an announcement that describes (but doesn’t name) the counterparty, provided the announcement:

• is complete, accurate and not misleading
• includes enough information to enable the market to assess the market sensitivity of the transaction.

The announcement will also need to include the following specific statements: 

• confirmation that the listed entity doesn’t consider the counterparty’s identity to be information that a reasonable person would expect to have a material effect on the price or value of the entity’s securities
• confirmation that all material information relevant to assessing the impact of the contract on the price or value of the entity’s securities has been disclosed in the announcement, and the announcement is not misleading by omission
• a description of the counterparty that is sufficient to describe any market sensitive information about the counterparty, including its standing and creditworthiness. 

The general disclosure obligation remains the same – that is, the name of a counterparty to a transaction will need to be disclosed if a reasonable person would expect that information, if it were generally available, to have a material impact on the price or value of the entity’s securities. 

When listed entities are considering whether and how to disclose information about potential transactions, a practical approach should be taken to assess whether the identity of the counterpart is material. In doing so, consider the following:

• A confidentiality agreement doesn’t enable a listed entity to avoid complying with its obligations under the Listing Rules, and in particular, the obligation to give ASX information for release to the market where required by Listing Rule 3.1.
• ASX generally doesn’t expect companies to disclose indicative, non-binding preliminary transactions – such as a non-binding indicative offer, letter of intent or memorandum of understanding – provided they remained confidential, and the information concerns an incomplete proposal or negotiation or is insufficiently definite to warrant disclosure.
• Where a listed entity wants to make an announcement about a market sensitive contract or transaction without disclosing the identity of a counterparty, that announcement will be required to include a description of the counterparty that shows its standing and creditworthiness and any other information relevant to its market sensitivity.
• ASX has warned it will continue to monitor and use its enforcement powers in situations where listed entities make market announcements with a view to ‘ramping up’ the price of their securities – which may include the failure to disclose the name of the counterparty when that information was reasonably necessary to allow investors and their professional advisers to understand the materiality of the contract or transaction. See our article, ‘ASX cracks down on ‘ramping announcements’ for more.

For advice on continuous disclosure obligations and broader corporate governance and regulatory matters, please contact our team.

This article was written with the assistance of Charlotte White, Law Graduate.