In May 2014, ASIC released REP 393, Handling of Confidential Information: Briefings and unannounced corporate transactions. The report was released in the month prior to ASIC commencing proceedings against Newcrest in the Federal Court, where the Court determined as appropriate an agreed civil penalty of $1.2 million against Newcrest for its (admitted) selective disclosures during analyst briefings of market sensitive information in relation to its production and capital expenditure.
The report sets out the results of ASIC’s review of how market sensitive information is handled by listed entities and their advisers. It stresses that the listed entity must take responsibility for managing its own confidential information. It includes recommendations, dealing with matters such as:
- Listed entities should have compliance systems and training in place.
- Listed entities should ensure broad access to briefings and consider making available full transcripts or recordings.
- A listed entity should appreciate that others (such as advisers) may have interests that diverge from the entity’s.
- The listed entity should be recording advisers and investors it has approached with confidential information, have a script it can use about confidentiality and potentially have a pro-forma confidentiality agreement available (e.g. if it frequently seeks to raise capital).
- Listed entities should prepare for leaks of unannounced transactions, e.g. having a leaks policy and draft announcements and requests for trading halts.
Working with ASIC in light of REP 393, the Governance Institute of Australia and the Australasian Investor Relations Association released a 2014 revision of their publication Handling confidential, market-sensitive information: Principles of good practice.
On 6 March 2015, ASX released its Consultation Paper seeking comments on proposed changes to ASX Listing Rules Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B, which seeks to cover market developments such as Newcrest and ASIC REP 393. The proposed changes will expand and clarify the guidance in relation to:
- analyst and investor briefings;
- correcting and publishing analyst forecasts and consensus estimates; and
- when an earnings surprise ought to be disclosed to the market
Comments on the Consultation Paper are due 24 April 2015, with ASX aiming for updated Guidance Note 8 to be in place by 1 July 2015 (subject to feedback and discussion).