ASX has announced that it is introducing a new ‘close review procedure’ for companies that repeatedly fail to meet ASX’s disclosure standards under the ASX Listing Rules. This procedure will involve additional scrutiny of a company's market announcements for at least 6 months.

How it will work

ASX will first privately notify the company about concerns and allow them to respond. If implemented, ASX will publicly announce the review period during which all company announcements will face additional checks before release. This will cause delays in releasing information to the market and companies will need to request trading halts for market-sensitive announcements.

The procedure may be triggered when ASX has serious concerns about a company's disclosure-related compliance, including:

• required amendments to, or withdrawal of, an announcement before release;

• clarifications or corrections required after release;

• announcements that are inconsistent with ASX guidance;

• failure to address previously raised disclosure issues; and

• ASX having difficulty contacting the entity or lack of cooperation by the entity.

Implications

The review period will typically last 6 months, during which companies must improve their disclosure practices. If problems persist beyond 12 months, ASX may take steps to remove the company from the official list. ASX warns that investors should carefully assess announcements from companies under this review procedure, as they have been flagged for disclosure concerns.

ASX's expectations

ASX anticipates that very few companies will be subject to this procedure at any given time, as it will only be used for serious and repeated disclosure failures. The primary goal of the procedure is to improve disclosure practices rather than to punish companies for past failures.