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ASX has issued some helpful and pragmatic guidance in relation to continuous disclosure obligations in the COVID-19 environment. Key aspects of the guidance are:

  • ASX recognises the challenges for listed companies in satisfying their disclosure obligations in this rapidly evolving and highly uncertain situation.
  • The key issue remains that disclosure is required if the matter would have a material effect on the price or value of securities, unless it falls within certain exceptions.
  • In some cases, it may not be possible for companies to make an announcement given the level of uncertainty, such as where the information is a matter of supposition or insufficiently definite to warrant disclosure, or there is not a clear and reasonable basis for making forward-looking statements.
  • ASX recommends that companies, who have not already done so, carefully review any previously published guidance and if necessary update it, or more sensibly withdraw it given the highly uncertain climate. ASX does not expect companies to issue updated guidance in the current climate unless there is a clear and reasonable basis to do so. ASX notes that disclosure obligations “do not extend to predicting the unpredictable.
  • Companies that make major operating decisions, such as standing down a material number of employees or closing or suspending operations or facilities, should disclose if it is likely to have a material effect on the price of value of its securities. Companies should not just disclose that it has happened but what the likely impact will be, including if possible to their financials.
  • Companies in financial difficulties may also be required to make relevant disclosures, for instance if it is intended to appoint an administrator, or a major lender has declared an event of default and is seeking repayment of its loan.
  • They have been quite a few companies that have announced the cancellation or suspension of dividends or other distributions that they had previously announced. ASX now says that in those circumstances the announcement should explain the legal basis for being able to make the cancellation, such as cancellation being authorised by the company’s constitution. It has been a grey area whether all the companies who have cancelled dividends have had a proper legal basis to do so (see our earlier client alert here) and ASX is putting the onus on companies to positively confirm they have the relevant power or authority to do it. Interestingly, ASX expects that companies promptly make an ASX announcement if they don’t intend to pay a dividend where a dividend was paid in the previous corresponding period. This raises the bar for companies regarding their disclosure requirements.
  • ASX is carefully scrutinising potentially misleading claims around COVID-19, such as announcements that a company’s products kills the virus, or that it has developed a test, cure or treatment for the virus. ASX will zero in on these types of announcements to ensure that they are properly substantiated and not misleading. If it has concerns then ASX will move to immediately suspend trading.

Having regard to ASX ‘s updated disclosure guidance, listed companies should carefully consider if they need to make further disclosures, particularly if they have given financial guidance, to ensure the market is fully informed. They should also be careful to ensure that any such disclosures are complete, accurate and not misleading.

Further Information

If you would like to draw from other global resources developed by Baker McKenzie on COVID-19, please visit our Coronavirus Resource Center.

Author

Frank Castiglia is a partner in Baker McKenzie's Sydney office, and as one of Australia's leading capital markets lawyers, Frank has advised on some of the largest transactions in recent times.

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Richard Lustig — a partner in the Firm’s Melbourne office — is the Australian head of mergers and acquisitions and has 30 years experience in acting for bidders and targets. Richard focuses on public mergers and acquisitions including takeovers and schemes of arrangements, as well as initial public offerings and capital raisings. Richard is recognized as a leading recommended lawyer by Chambers Global, APL500, Chambers Asia Pacific, Best Lawyers in Australia, Doyles and IFLR. Chambers Global recognizes Richard's prominence in takeover transactions and those conducted by schemes of arrangement.

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Derek is a partner in Baker McKenzie's Corporate Markets practice group in Brisbane. Derek practices in corporate law with a focus on capital markets, including mergers and acquisitions and capital raising, primarily in the energy and resources sector.

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Antony Rumboll is a partner in the Sydney office of Baker McKenzie and is head of the Australian Equity Capital Markets group. Antony advises on capital markets and public M&A transactions and has a distinguished 20 year legal career in both private practice and as an in-house lawyer. Antony was a senior member of the in-house legal function at a global financial services firm for 10 years, where he advised on transactional matters across the full breadth of its market leading Australasian investment banking business. He draws on this significant experience to provide a unique insight to clients across a wide range of corporate finance transactions and other matters.

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Guy Sanderson is a partner in the Firm’s Sydney office, and co-leads the Firm's Australian Capital Markets team. He works mainly on public company mergers, acquisitions, equity capital market transactions, and cross-border listings.

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Arthur Apos joined Baker McKenzie in February 2015 as a partner in the Corporate Markets team in the Melbourne office. He was previously with a multinational law firm where he was the head of the corporate practice in Melbourne and Perth. Arthur completed a one-year part-time secondment with Goodyear as their acting general counsel. As a member of the senior management team, Arthur gained firsthand insights into the broad range of issues which confront businesses and the importance of tailoring timely, cost effective and pragmatic legal solutions. Arthur is recognised by Best Lawyers for 2016 for his extensive knowledge in corporate law.

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Adrian Chin acts for a wide range of predominantly global companies and has been doing so since the early 1990s.

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Simon De Young, a partner in Baker & McKenzie’s Melbourne office, has extensive experience in private equity, public and private treaty M&A and equity capital markets transactions. He is a member of the Firm's Global Health, Pharmaceutical & Biotechnology team, and has practiced in Australia and the United Kingdom.

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Bill Fuggle is a partner in the Sydney office of Baker McKenzie where he is a leading adviser in financial services, capital markets and funds management transactions. Bill has been instrumental in drafting innovative structured products in Australia and has been engaged in key advisory roles in significant transactions in the Australian and Asian market.

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Peter Ickeringill is a partner in the Corporate Markets group, based in Melbourne. He has been based in London, Hong Kong, and Beijing as well as Melbourne, where he has been a partner of first tier national law firms as well as a director and group general counsel for one of the largest global media groups.

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Kate Jefferson joined Baker McKenzie’s Sydney office in 2005 and worked in the Firm’s New York office in 2007 and 2008. Kate also undertook a four month secondment to at a global investment bank. Kate previously worked for Herbert Smith Freehills from 2001 to 2005 and as a management consultant to the London Stock Exchange from 2000 to 2001.

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Andrea Kennedy is a partner in the Corporate Markets Practice Group of the Firm's Melbourne office, where she advises on telecommunications, M&A, and government and regulated industry work, among others. She has over 20 years of experience in top-tier law firms and has held in-house legal positions in Australia and internationally.

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Ben McLaughlin is the chair of the Global Healthcare Industry Group and a partner in Baker McKenzie's Sydney office. He has over 25 years' experience in advising leading Australian and international public companies on mergers and acquisitions (M&A) and equity capital markets. Ben conceptualized the Baker McKenzie Healthcare MapApp, an acclaimed mobile application that enables clients to access over 1,000 pages of legal summaries. He has been recognized by Chambers for his work in Australian and international M&A matters, as well as in pharmaceuticals and life sciences. Ben is admitted to practice law in Australia and the US, and is an adjunct member of the Faculty of Law at the University of Sydney.

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Lawrence is a partner in the Corporate practice group in Sydney and advises strategic investors, private equity sponsors and large corporations on complex M&A and related transactions. In addition to his Australian experience, he has also spent two years advising on domestic US and Australian inbound M&A transactions whilst based in Baker McKenzie's Chicago office.

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Jim Peterson is one of Queensland’s leading corporate lawyers and has extensive experience in resources, mining and corporate governance. Over the past 25 years Jim has advised many public and private sector entities, including blue chip companies, as well as many leading private clients. Jim is well known for his work with the finance sector on financial services reform and is a trusted adviser to the resources sector, particularly the coal industry. His expertise includes mergers and acquisitions (both regulated and unregulated), corporate structuring, joint ventures, private equity, equity capital markets, corporate governance and director’s duties, related part transactions, and compliance with various complicated provisions of the Corporations Act and ASX Listing Rules. Jim has been named Leading Corporate Lawyer by Doyle's Guide (Queensland, 2017) and Leading Commercial Lawyer (Queensland, 2017). He was also recognised by Best Lawyers (2018) and name a Recommend Lawyer by Legal 500 in 2016. He was a finalist in the Lawyers Weekly Australian Law Awards for Team of the Year in 2017.

Author

Rick Troiano is a partner in the corporate team at Baker McKenzie. Rick specialises in mergers and acquisitions, equity fundraising and corporate advisory. Rick previously worked as a lawyer at the Australian Takeovers Panel, the main forum for resolving takeover disputes in Australia. This has given him a solid understanding of the law and policy behind the regulation of takeovers and other control transactions in Australia. Rick is a member of the Corporations Committee (Law Council of Australia), a forum through which current legal issues affecting business are discussed and considered in the context of law reform in Australia.