ASX continuous disclosure: Listing Rule 3.1 and the carve-outs

What Listing Rule 3.1 requires

ASX Listing Rule 3.1 establishes a fundamental obligation for listed entities. It requires them to immediately disclose to the ASX any information concerning the entity that a reasonable person would expect to have a material effect on the price or value of its securities.

The term 'immediately' is interpreted strictly. This generally means that disclosure must occur promptly and without delay once the information is sufficiently certain and the entity is aware of it.

Disclosure must be made via an ASX announcement. This announcement must be released through the market-announcements platform, ensuring it becomes publicly available.

The 3.1A carve-outs

Listing Rule 3.1A provides a limited exception to the continuous disclosure obligations. An entity may withhold disclosing information if all three conditions are met. These conditions relate to specific exclusions applying to the information, its confidentiality, and public expectation.

The first condition requires that one or more specific exclusions apply. Examples of these exclusions include information relating to an incomplete proposal or negotiation, a matter of supposition or insufficiently definite information, or information generated for internal management purposes, or trade secrets. The second condition mandates that the information remains confidential and that the ASX has not determined that confidentiality has been lost. Finally, the third condition requires that a reasonable person would not expect the information to be disclosed.

It is crucial to understand that all three conditions must be satisfied for the carve-out to apply. Failure to satisfy any one of these conditions means the continuous disclosure obligations remain. ASX Guidance Note 8 provides further explanation of how the ASX interprets this rule and its carve-outs.

Statutory and director consequences

Contravention of the continuous disclosure rule, as outlined in Listing Rule 3.1, also constitutes a contravention of Section 674 of the Corporations Act 2001. This means that bodies corporate can face substantial civil penalties. These penalties can be the greater of a specified penalty-unit amount, three times the benefit obtained, or 10% of annual turnover for the relevant period.

Directors and officers of listed companies can be held personally liable if they are involved in a contravention of the continuous disclosure rule. Directors should regularly director duties self-check to ensure compliance.

Disclosure failures are frequently a component of shareholder class action proceedings. These claims are often combined with allegations of misleading or deceptive conduct.

Practical compliance steps

To assist in compliance with Listing Rule 3.1, listed entities should establish and maintain a continuous-disclosure policy. This policy should clearly define authority levels, escalation procedures, and timelines for disclosure decisions. The policy’s effectiveness relies on consistent application and regular review to ensure it remains current.

Protecting the 3.1A carve-out requires careful management of information. Market-sensitive information should be treated as confidential and disseminated only on a need-to-know basis prior to public release. This limits the risk of inadvertent disclosure. Directors, executives, and investor relations staff should receive regular training to recognise price-sensitive information and understand the operation of the carve-out. penalty estimator can assist in understanding potential consequences of non-compliance.

A robust process for announcement approval is also essential. Pre-clearance of announcements through a disclosure committee, ideally with legal review, provides an additional layer of scrutiny and helps ensure accuracy and compliance.

• Maintain an up-to-date continuous-disclosure policy.
• Train relevant staff regularly.
• Pre-clear announcements.