New guidance for ASX-listed companies

Two new guidance documents are now available to support ASX-listed companies. The third edition of the ASX’s Corporate Governance Principles and Recommendations (CGPR) comes into effect on 1 July after a recent review, and ASIC has released guidance to ASX-listed entities on analyst and investor briefings.

Corporate Governance Principles and Recommendations

Since 2003, the council has developed and released recommendations on the corporate governance practices to be adopted by ASX-listed entities designed to promote investor confidence and to assist listed entities to meet stakeholder expectations.

Under Listing Rule 4.10.3, ASX-listed entities are required to benchmark their corporate governance practices against the council’s recommendations and, where they do not conform, to disclose that fact and the reasons why. The rule effectively encourages listed entities to adopt the council’s recommended practices but does not force them to do so. It gives a listed entity the flexibility to adopt alternative corporate governance practices, if its board considers those to be more suitable to its particular circumstances, subject to the requirement for the board to explain its reasons for adopting those alternative practices.

The current version of the council’s CGPR was released on 27 March 2014 and takes effect for a listed entity’s first full financial year commencing on or after 1 July 2014.

The CGPR was referenced in the Guide for Life Sciences Company Directors, published by AusBiotech in late 2013 to accompany the Code of Best Practice for Reporting by Life Sciences Companies. The new CGPR does not alter the guidance provided in either of these industry-specific documents.

The ASX’s Corporate Governance Principles and Recommendations can be found here.

Guidance to ASX-listed entities on analyst and investor briefings

ASIC has released Report 393, Handling of Confidential Information: Briefings and Unannounced Corporate Transactions, which deals with the release of confidential information by ASX-listed entities in investor and analyst briefings and unannounced corporate transactions.

The report sets out key observations from a review of the way in which listed entities and their advisers handle confidential, market-sensitive information.

ASIC says this issue affects investor confidence in our markets and is key to ensuring investors are trading on the same information. The key points of the report were:

• Listed entities must take responsibility for the management of their confidential information.
• Poor practices can negatively affect reputation, jeopardise the success of a transaction and may lead to ASIC action.
• Future ASIC work includes a targeted review of research reports by analysts and a continued enforcement focus on insider trading and listed entities that fail to comply with continuous disclosure laws.

The full ASIC Report 393 can be found here.