ASIC has recently put all parties involved in capital raising and M&A transactions on notice that they must vigilantly manage the risks of leaks or mishandling of confidential information.
In the ASIC December Corporate Finance Update - Issue 15, ASIC note that they have observed an increase in media reporting ahead of fundraising and takeover activity, and warn parties that they should continue to monitor trading around significant market announcements to identify potential market misconduct, insider trading and continuous disclosure issues.
ASIC have also specifically advised that they are paying close attention to recent market activities where they suspect that confidential information has been leaked to the media.
Here are some of our tips from the Corporate Finance Update for those involved in relevant significant transactions:
For market participants and corporate advisers
ASIC suggest that policies and procedures targeted at addressing behaviour and processes for handling confidential information are vital, including:
- implementing and maintaining effective information barriers;
- limiting access to information on a ‘need to know’ basis;
- effectively wall-crossing staff who are made aware of confidential information;
- maintaining insider lists;
- having appropriate restrictions on and monitoring personal account dealing; and
- effective oversight by a compliance or control function.
For listed entities
ASIC note that entities involved in capital raising and takeovers must proactively manage information about those transactions, including:
- requiring consultants and contractors to enter confidentiality agreements;
- having appropriate arrangements to handle confidential information, including limiting access on a ‘need to know’ basis;
- recording who has been provided with the confidential information – and when; and
- actively monitoring and meeting continuous disclosure obligations in relation to fundraising and control transactions.
The strong recommendation from ASIC is for entities to put in place a formal leak policy outlining steps to prevent, monitor and react to any leaks of proposed transactions.
A separate recommendation is made for advisers to listed entities (including lawyers) to also have policies, procedures and appropriate controls to limit access to confidential information to only those who require it.
If you require advice in relation to implementing media leak or handling of confidential information policies, please reach out to a member of our Corporate team.