A reminder of ASX updates to Guidance Note 8

We reiterate the importance for ASX listed entities to familiarise themselves with the following important amendments as well as procedural changes to Guidance Note 8.

We recommend that entities adopt adequate processes to enable them to be responsive and notify ASX immediately following any key and material developments affecting their entity, particularly in response to the changes in Guidance Note 8.

With effect as of 5 June 2021 are updates by ASX to Guidance Note 8 in relation to the following key changes:

  1. Full disclosure of market sensitive information concerning market sensitive contracts, as detailed in section 4.15, Listing Rule 3.1
  2. Additional explanatory material to the reasonable person test in connection with Listing Rule 3.1A, as detailed in section 5.9
  3. A new section 7.9 dealing with cancelling, deferring, or reducing a dividend distribution or interest payment
  4. A new section 7.10 dealing with ramping announcements
Contents of announcements guideline (Section 4.15, Listing Rule 3.1)

ASX has confirmed its position on naming counterparts to market sensitive contracts following the decision in ASIC v Big Star Energy Limited (No 3) [2020] FCA 1442.

ASX requires that “where there is little or no information regarding the counterparty in the public domain, an announcement is to include a description of the counterparty as well as a summary of the due diligence undertaken by the listed entity on the counterparty’s financial capacity to perform its obligations in relation to the transaction and other capacity to perform their obligations in relation to the transaction” (page 26, Guidance Note 8).

A new footnote 110 has been included in Guidance Note 8 to clarify a problematic area “for some listed entities” being a failure “to disclose when a previously announced material customer contract does not proceed or is terminated (i.e. only disclosing good news, not bad news). Generally speaking, if information about the entry of a customer contract is sufficiently material to justify its disclosure, ASX’s starting assumption will be that information about its failure to proceed or termination is also sufficiently material to justify its disclosure, unless the entity can make a clear and convincing argument to the contrary.”

Listed entities should be proactive in obtaining adequate information about their counterparties before entering into market sensitive contracts and publish corrective announcements where significant changes occur in relation to “material customer contracts”, as the ASX may suspend trading in the entity’s securities if insufficient levels of information are disclosed.

The reasonable person test (Section 5.9, Listing Rule 3.1A.3)

ASX provides further guidance on the “carve outs” relied on by listed entities to justify non-disclosure.

In summary, the ASX requires announcements made by listed entities be materially accurate, complete and not misleading in accordance with Listing Rule 3.1. Noting that the reasonable person test would be satisfied if information falls within the prescribed categories in Listing Rule 3.1A.1 and that meets the confidentiality requirements in Listing Rule 3.1A.2 whereby such information can be excluded from an announcement made by a listed entity.

Page 41 of Guidance Note 8 includes two examples, which would trigger disclosure by the listed entity and displace the above general principle as follows:

  1. if a listed entity “cherry picked” its disclosure by making announcements in respect of “good information” as it is likely to have a positive effect on the value of the securities but not bad information as it is likely to have a negative effect on the value of the securities; or
  2. if the excluded confidential information is likely to make another disclosure made by the listed entity under Listing Rule 3.1 misleading, incomplete and/or inaccurate.

Accordingly, ASX’s additional guidance to listed entities in relation to its two examples above is unsurprising in that ASX requires “that an announcement under Listing Rule 3.1” “be materially accurate, complete and not misleading. Listing Rule 3.1A.3 operates to ensure that a listed entity cannot rely on a particular piece of information falling within a carve-out to immediate disclosure under Listing Rule 3.1A.1 and satisfying the confidentiality requirements in Listing Rule 3.1A.2, to justify excluding that information from an announcement to the market under Listing Rule 3.1, if the failure to include that information would render the announcement materially inaccurate, incomplete or misleading. A reasonable person clearly would expect a listed entity, acting responsibly and in accordance with its statutory obligation not to mislead or deceive, to disclose the excluded information” in a particular situation.

Introduction of section 7.9 – Cancelling, deferring or reducing a dividend, distribution or interest payment

The new section 7.9 requires any announcement under Listing Rule 3.21(a)(ii) to include an explanation satisfactory to ASX of the entity’s reasons for cancelling, deferring or reducing a dividend, distribution or interest payment.

“ASX will expect this explanation to be reasonably detailed and to justify in reasonably clear terms why the entity considers it necessary to cancel, defer or reduce the dividend or distribution after it has been announced to the market and the market has traded on the expectation of receiving the dividend or distribution. A simple statement along the lines of “the board thought it prudent to [cancel/defer/reduce] the [dividend/distribution] in the current economic climate” will not be sufficient. In an appropriate case, ASX may ask the entity to include in the explanation a discussion of any alternatives the entity’s board considered to cancelling, deferring or reducing the dividend or distribution” (page 64, Guidance Note 8).

Introduction of section 7.10 Ramping announcements

ASX has also expressed concern that listed entities are making market announcements to “ramp up” the price of their securities particularly around contracts without providing proper disclosure to the market concerning the details of the contract. If such behaviour is suspected, listed entities are at risk of having their securities suspended from trading and be issued with a query letter asking numerous questions, including asking the entity to verify whether the announcement was marked as market sensitive when it was filed on MAP, as well as what information was considered by the entity as being market sensitive. The ASX may also ask the entity to explain its purpose if the announcement was not marked as market sensitive, as well as requiring an entity to identify the reasonable grounds on any material assumptions or qualifications if an entity’s announcement includes a revenue projection.

Listed entities may be required to provide a copy of the contract relating to their announcement about contracts to the ASX to verify compliance with Listing Rules disclosure obligations. If ASX forms the view that disclosure was a ramping announcement, the ASX may require the entity to publish a corrective announcement about the ramping announcement being incomplete and misleading and that investors should not make investment decisions based on the ramping announcement.

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Danielle Snell and the Elit team represented our company in a restraint of trade case issued in the Federal Court of Australia concerning a former senior executive of our company breaching his employment contract and duties by allegedly soliciting clients and staff from our company to set up a competing business.

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Danielle represented me when I was a key witness in a significant construction case spanning across 12 weeks.

I was required to give evidence in the litigation which involved me being cross-examined by senior counsel over 2 days. Danielle’s guidance was invaluable. She provided clear direction and advice about the technical and practical aspects of giving evidence and instilled confidence in me throughout the process. Her expertise and unwavering support during this time was pivotal.

I highly recommend Danielle, Robert and the Elit team for their dedicated, expert and supportive approach to commercial litigation.

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Shane

I just wanted to thank you all for the hard work and dedication you put into my Workcover case.

A special thanks to Aggie whom I’m glad I chose to support me and give me the step by step instructions on how to go about proving my case for a result in my favour.

Thanks again for all your advice.

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Aggie is the best lawyer in Common Law Claims I have ever worked with. Having seen a couple of large Law Firms l felt let down, being quickly shown the front door. Luckily for me a friend suggested seeing Aggie Vlahos (Partner).

Having engaged Aggie Vlahos gave me the confidence to continue with the injuries l knew were caused by heavy physical and repetitive work. I am also indebted to Brendan Johnson (Barrister) for his outstanding efforts!

She explained everything in a way I could easily understand and always got back to me quickly when I had questions even outside her working hours.

Aggie helped me achieve an extraordinary outcome. However, only charged fair fees.

If someone is seeking a legal help, I highly recommend Aggie Vlahos and Elit Lawyers.

P.S. Thanks to you so much Aggie

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I had the good luck to be recommended to Aggie Vlahos for handling my Estate Litigation Case. She was always available to me, no matter how big or small my concern was. She was kind, patient, easy to talk to and very understanding regarding my troubles.

The case was resolved within only 5 months, which I was grateful for. Through Aggie I achieved a very satisfying result.

I would have no hesitation in recommending her to others.

 

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"If you want a safe, caring, professional group of lawyers and company, look no further than Aggie Vlahos and Elit Lawyers."

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Thank you to Aggie Vlahos (Partner) and the staff at Elit Law, also James Eley (Barrister). You did a marvelous job in representing me in relation to my family matter and most importantly caring about me and providing a secure environment for me to navigate a very difficult situation.

The result you achieved was nothing short of amazing. The professionalism displayed on the day by Aggie and James blew me away. With their invaluable guidance and support we achieved a extremely favourable result.

If you want a safe, caring, professional group of lawyers and company, look no further than Elit Lawyers.

Great people, Great Service, Great Company.

 

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"The best of the best plaintiff lawyers against insurance companies. We had a very tough and complex case and Danielle and her team settled with the insurance company for an optimal outcome."

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Home owner

The best of the best plaintiff lawyers team against insurance companies.

We had a very tough and complex case against insurance company that we lost our home and contents.  After disappointing and frustrating process from another law firm and firing them we found Danielle Snell and her team.

They are very dedicated, knowledgeable, passionate and possess great communication skills.  We couldn’t ask for more and settled with a optimal outcome.

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"It’s great to be able to confidently refer clients to someone who can help and support them, and to feel that they are receiving the best service."

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We are so glad to have you in our referral channel.

It’s great to be able to confidently refer clients to someone who can help and support them, and to feel that they are receiving the best service.

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"This was a “David v Goliath” fight as our dispute was with a large global corporation. The attention, compassion and guidance that Danielle and the team showed us was absolutely incredible."

CEO & Founder

National mental-health support organisation

We recently instructed Danielle from Elit Lawyers by McGirr & Snell to help with a legal dispute. As a small purpose led business, this was a “David v Goliath” fight as our dispute was with a large global corporation. This dispute was during a very emotional time as we were in the middle of a global pandemic, Melbourne’s sixth lockdown, homeschooling and no childcare – all while trying to keep our small business alive.

The attention, compassion and guidance that Danielle and the team showed us was absolutely incredible. I have 10 years legal experience myself and even with that, I was reluctant to litigate, especially during such a difficult time. However Danielle always gave us confidence in knowing that she was in our corner and always working for our best interests, so my reluctance was quickly appeased.

Today I am pleased to share that David defeated Goliath and we could not be more thrilled with the result we received thanks to Danielle and the team from Elit Lawyers. Danielle not only saved our company, but ensured that we could continue doing the good work we were previously and helping improve the lives and mental health of mothers across Australia.

I could not recommend Danielle and the team from Elit Lawyers more highly. I am *hoping* that I will never need their services again, but feel very reassured knowing they are there and always in my corner.

Thank you Danielle and team.

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"Elit negotiated a settlement which saw all proceedings against my company dismissed, with no order as to costs."

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I was recently introduced to Elit Lawyers by McGirr & Snell by my former lawyers after they were required to cease acting for me due to a conflict of interest. The stakes were high as my company was exposed to multiple court proceedings. Elit Lawyers by McGirr & Snell impressed me so much. They went that extra mile and were able to negotiate a settlement which saw all proceedings against my company dismissed, with no order as to costs. I can’t thank Elit enough.

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"Danielle is a well-known and respected lawyer who knows how to handle difficult and intensive litigation."

Kings Counsel, Devers List

Victorian Bar

Danielle Snell is a very intelligent and impressive lawyer whom I have worked with in my role as senior counsel on various litigation matters.  She is a well-known and respected lawyer who knows how to handle difficult and intensive litigation.  Danielle combines a deep knowledge of the law across many practice areas with a practical approach to litigation, and is authentic and charismatic in her dealings with others.

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"Danielle and Robert demonstrate outstanding expertise and approach all matters methodically with a clear and practical focus..."

Chief Operations Officer

Peak industry body for fire protection

As Chief Operating Officer it is extremely important to work with lawyers who are easily accessible, honest and trustworthy.  We have briefed Elit Lawyers by McGirr and Snell across various legal disciplines and now use them as our “go to” solicitors.  Danielle and Robert demonstrate outstanding expertise and approach all matters methodically with a clear and practical focus on achieving the best possible result.

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"Danielle demonstrated a refreshing and unique ability to narrow the issues, and succinctly explain complex matters."

General Counsel

Leading home building company

Having worked alongside Danielle in litigation matters I have found her approach to be thorough and strategic.  In particular, Danielle demonstrated a refreshing and unique ability to narrow the issues, and succinctly explain complex matters.

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