As of 14 July 2018, listed entities will be required to identify whether an announcement is "market sensitive" at the point of E-Lodgment on ASX online. Although ASX will still make the final determination before releasing the announcement, this new requirement reinforces the need for listed entities to be cognisant of what constitutes "market sensitive".
What are the changes?
An additional check-box will be included on the E-Lodgment form for ASX announcements made via ASX's online company announcement platform, which will require listed entities to identify whether or not the announcement is "market sensitive". Previously ASX was responsible for determining whether an announcement was "market sensitive" before releasing it. The changes are designed to improve the time taken to process and release announcements on ASX.
ASX is also introducing another change which will require listed entities to indicate whether or not the announcement materially references another listed entity.
What announcements are "market sensitive"?
Under Listing Rule 3.1, the information in an announcement is considered market sensitive if "a reasonable person would expect the information to have a material effect on the price or value of the entity's securities". Section 677 of the Corporations Act provides further that this test is deemed to be met "if the information would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the securities".
ASX has advised that some announcements will automatically default to "market sensitive" and this cannot be altered by the listed entity. These include specific announcements in relation to takeovers, periodic reports such as half yearly and full year reports and mining/exploration quarterly reports.
As a result it would seem that almost all ASX announcements (apart from those more general procedural announcement, such as appointment of a new Company Secretary) will be marked as "market sensitive".
What does this mean for listed entities?
The changes should not cause too much concern for listed entities. While listed entities are now responsible for identifying announcements as "market sensitive", the ASX will still have the ultimate responsibility of classifying the announcements. Where the ASX has classified the announcement differently to the listed entity (ie. it has determined that an announcement should have been marked as "market sensitive") there has been no suggestion that any penalties or fines will be imposed on the listed entity.
From a practical perspective, the process undertaken by a listed entity in determining to make an announcement should not change, as the rules with respect to "continuous disclosure" have not changed, rather this is a change to the lodgment process. Listed entities will merely need to include an additional step in their announcement approval process by which it is determined whether or not to mark an announcement as "market sensitive" or not. Generally, announcements by their very nature, will almost always be "market sensitive", otherwise perhaps an entity should consider why they are making the announcement at all.