Following on from our previous publication examining the admission requirements for listing on the National Stock Exchange (NSX), Partner Nino Odorisio provides a summary of NSX Practice Notes No.6 and No.9 outlining the continuous and some key periodic disclosure obligations once an entity is listed on the NSX.
Continuous disclosure principles
The Corporations Act 2001 (Cth) (Act) continuous disclosure rule (Rule) ensures that our markets are conducted in a fair, orderly, transparent manner. Enshrined in Chapter 6CA of the Act, the Rule imposes strict disclosure obligations on listed disclosing entities and provides that:
- if a listing market requires listed disclosing entities to notify the market operator of certain information to make that information available to market participants; and
- the entity has information that must be notified to the market operator; and
- that information:
- is not generally available to the public; and
- is information that a reasonable person would expect, if it were generally available, to have a material effect on the price or value of the securities of that entity,
then, the entity must notify the market operator of that information.
For the purposes of this alert, we have focused specifically on listing rules and forms required by Part IIA: Equity Securities of the NSX Listing Rules.
Specific disclosure obligations
NSX Listing Rule (LR) 6.4 requires an issuer to keep the NSX informed without delay for dissemination of any “market sensitive information”. “Market sensitive information” means any information relating to the entity and its group of which it is aware that:
- is necessary to enable the NSX and the public to appraise the financial position of the issuer and the group;
- is necessary to avoid the establishment of a false market in its securities; or
- a reasonable person would expect to have a material effect of the price or value of its securities.
Examples (and by no means an exhaustive list) of market sensitive information include:
- transactions that will lead to a significant change in activities (LR 6.41);
- deposit discoveries (LR 6.13 and the Joint Ore Reserves Committee);
- acquisition or disposal of a material portion of the business;
- granting or withdrawing of a material license or right;
- material legal action against the issuer or legal action the issuer is undertaking against a third party;
- changes in forecast of earnings provided by the issuer;
- the issuer moving into liquidation or administrator receivership;
- breach of covenants on loans or contractual relations with a financier; and
- notices of intention or receiving a takeover bid, merger or acquisition.
Any such market sensitive information must be first made available to the NSX before any other public announcement of the information.
The Rule in LR 6.4 does not require information to be disclosed where:
- a reasonable person would not expect the information to be disclosed;
- the information is confidential and the NSX has not formed the view that the information has ceased to be confidential; and
- at least one of the following applies:
- it would be a breach of the law to disclose the information;
- the information concerns an incomplete proposal or negotiation;
- the information comprises matters of supposition or is insufficiently definite to warrant disclosure;
- the information is generated for the internal management purposes of the issuer; or
- the information is a trade secret.
Such information which would not require disclosure may include:
- transactions which are in the early stages of negotiation and are not sufficiently definite to warrant disclosure;
- specific techniques used in the conduct of an entity’s business which may be a trade secret; or
- information produced as part of the day-to-day running of the entity’s business.
Issuers who fail to disclose market sensitive information in a timely manner to the NSX, whether internationally, recklessly or negligently, may be considered in breach of Listing Rule 6.4 and may refer the potential breach to the NSX Compliance Committee for possible disciplinary action.
Periodic disclosure
In addition to the specific continuous disclosure obligations of the NSX, the NSX also requires listed entities to adhere to certain periodic disclosure obligations, which are outlined in the remainder of Chapter 6 of the NSX Listing Rules.
In the table below we outline some events requiring periodic disclosure by NSX listed equity securities only. We have also included the corresponding process and associated forms where applicable that are used for lodgement via the NSX’s Company Announcements system.
A complete list of periodic disclosure obligations, including as for NSX listed debt securities and managed investment schemes, can be found in the NSX’s Practice Note 9 – Periodic Disclosure.
Required Disclosure | NSX Listing Rule | Form1 |
Half Year Financial Reports | 6.10 | Section 2A - Half Year / Preliminary Final Report. |
Preliminary Financial Reports | 6.11, 6.12 | Section 2A - Half Year / Preliminary Final Report. |
Annual Reports | 6.8 | None – issuer must provide an electronic copy of its annual accounts to the NSX as soon as the accounts are available but no later than the timetable in the Act. |
Notice to Shareholders that accounts have been dispatched | 6.8 | None - letter to be sent to NSX. |
Dividends or income distribution | 6.22 | None - letter to be sent to NSX at least 7 business days prior to the record date for that distribution. |
Allotments | 6.18 | None - letter must be sent to NSX as soon as possible, but in any event, not later than the morning of the next business day after the allotment of securities. |
Initial, changes and final directors’ interest notices | None | NSX Initial-Final Directors Interests Notice. |
Initial, changes and ceasing to be a substantial shareholder notices | None | ASIC Form 603 – Initial Substantial Shareholders Notice. |
Changes in directors | 6.17(2) | Section 2A - Directors Declaration. |
Quotation of Additional Securities | 6.18, 6.52 | NSX Quotation of Additional Securities. |
Closure of Books | 6.6
| None – listed issuers shall send the NSX electronic notice of the any closure of its register of members at least 10 business days before the closure. |
Notice of Annual General Meeting | 6.7 | None - the issuer must send a copy of the notice of meeting to the NSX for dissemination by the NSX. |
After Board Meetings | 6.16
| None - the issuers shall inform the NSX without delay, for dissemination by NSX, of any decision made in regards to:
|
Notices to Shareholders | 6.33, 6.34, 6.49 | None - the issuers shall provide the NSX with an electronic copy, for dissemination by the NSX of:
|
Significant Transactions | 6.41, 6.42 | None – the issuers shall provide full details to NSX as soon as practicable of any proposed significant change to the nature or scale of its activities. The issuer must do any of the following if required by NSX:
Listed issuers that fail to lodge on time will be placed in a Trading Halt. |
Minimum Required Holders | 6.20 | None – the issuer must inform the NSX without delay if it becomes aware that the number of listed securities which are in the hands of the public has fallen below the relevant required minimum percentage or the number of holders of securities has fallen below the prescribed minimum. |
Disclosure of Proxy Votes | 6.56 | None - information required by section 251AA(1) of the Act is to be disclosed to the NSX. |
Listed Issuer to disclose information filed overseas | 6.56 | None – the issuer must disclose to the NSX by the next business day information to be disclosed to another Approved Exchange. |
Other changes such as winding up events, appointment of an administrator or receiver, the entry into possession of or the sale by any mortgagee of a portion of the issuer’s assets, making of a judgment, declaration or order by a court which may adversely affect the issuer’s enjoyment of its assets | 6.19, 6.21 | Section 2A - Directors Declaration. |
Other changes including: | 6.13, 6.15, 6.44 | None – timetable for reporting is as per the Act and NSX Listing Rules. |
1 All NSX forms can be accessed from the NSX website.
Rule Changes Relating to the Implementation of the Trade Acceptance Service
NSX has recently received ASIC regulatory clearance for rule changes relating to the implementation of the Trade Acceptance Service (TAS). TAS will allow market transactions executed through the NSX to be eligible through registration and novation in accordance with the operating rules of NSX Clear with effect from the time of the trade to execution.
This change represents a significant enhancement for the NSX Market. It brings post-trade automation to the back office by adopting current market practice through the Clearing House Electronic Subregister System (CHESS). This enables participants of the NSX to reduce operational overhead by automating settlement messaging of eligible NSX securities.
As a nominated advisor of the NSX, HopgoodGanim Lawyers recently advised mineral sands and development company Pyx Resources Limited (NSX:PYX) with its recent initial public offering and subsequent listing on the NSX.
If you require any further information or assistance in relation to the NSX, please contact our Corporate team.