Thinking | 23 June 2009

Update on continuous disclosure by unlisted entities

On 18 June 2009 the Australian Securities and Investment Commission (ASIC) released its Regulatory Guide 198 Unlisted disclosing entities: Continuous disclosure obligations (RG 198). RG 198 sets out “good practice” guidelines for continuous disclosure by unlisted entities through website publication of material information in relation to a disclosing entity.

Background

Under the Corporations Act 2001 (Act) unlisted disclosing entities are subject to continuous disclosure obligations that require them to notify ASIC of any information that is not generally available that would reasonably be expected to have a material effect on the price or value of the securities of the entity. RG 198 clarifies how disclosing entities can comply with their continuous disclosure obligations. Unlisted disclosing entities are generally comprised of:

  • certain unlisted bodies (mostly companies) with 100 or more members
  • certain unlisted debenture issuers
  • unlisted managed investment schemes with 100 members or more and
  • disclosing entities whose securities are quoted on a prescribed market but where the issuer is not admitted to that market’s official list.

The continuous disclosure regime applicable to unlisted entities requires them to lodge material information with ASIC. ASIC, acknowledging that this process is out of step with the widespread use of the internet as a key method of communication between product issuers and investors, recognises in RG 198 that communication by publication of material information on a website is a more effective means of communication with investors.

Good practice guidelines

Disclosing entities will need to follow the following guidelines in order to rely on RG 198:

  • all material information must be included on its website – information should be located in a single place on the website and there should be a prominent link on the entity’s homepage. The relevant section of the webpage should contain all material information, regardless of whether it has also been disclosed in some other manner. Disclosing entities should, however, avoid publishing lengthy documents where material information is buried within other information
  • the information must be published on the website as soon as practicable after first becoming aware of the information. ASIC expects that the information be published within a short period after the entity becomes aware of it given that website publication of information is relatively straightforward and
  • material information should be kept on the website for as long as it is material to a reasonable person’s determination of the price or value of the relevant securities. The unlisted disclosing entity must also retain records of its website disclosure in accordance with usual record keeping practices.

The guidelines require that the unlisted disclosing entity:

  • be satisfied that most of its investors are likely to look for information of that kind on its website
  • notify existing and new investors that it makes disclosure available through the internet and
  • disclose any material information on its website in a timely manner in accordance with the good practice principles set out in RG 198.

If an unlisted entity complies with the measures set out in RG 198 for website disclosure, it will not be required to lodge the same information with ASIC.Examples of information that may be required to be disclosed include the following:

  • financial forecasts/valuations/ratings
  • debt funding
  • external administration
  • management changes
  • access to funds
  • corporate actions and
  • benchmark disclosures.

Contact

Harry New

Harry leads our financial services team and focuses extensively on financial services law and corporate advisory.

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