ASIC’s new Regulatory Guide 247 ‘Effective disclosure in an operating and financial review’ should result in more meaningful operating and financial review disclosure for investors. Listed entities should review their previous operating and financial review disclosures and make any necessary changes to ensure that disclosure in their reports for the upcoming financial year end comply with the new guidance.
Following public consultation, ASIC has released Regulatory Guide 247 Effective disclosure in an operating and financial review which provides guidance on the requirement under section 299A(1) of the Corporations Act 2001 (Cth) for a listed entity to include information in its directors’ report which would allow a shareholder to make an informed assessment of the entity’s operations, financial position, business strategies and prospects.
ASIC has indicated that Regulatory Guide 247 is not intended to add unnecessary length to annual reports but rather is intended to lift the standard of disclosure by:
- promoting better communication of useful and meaningful information to shareholders; and
- assisting directors in understanding the operating and financial review requirements.
Regulatory Guide 247 also includes guidance on:
- appropriate standards of disclosure through the inclusion of worked examples;
- the use of the ‘unreasonable prejudice’ exemption from disclosing specific business strategies and prospects; and
- presentation of the analysis and narrative relating to operations and financial position.
See Regulatory Guide 247.