Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rules

Offence title:

Continuous disclosure—listed disclosing entity bound by a disclosure requirement in market listing rules

Act:

674 Corporations Act

Offence:

(1)   ss. 2 applies to a listed disclosing entity if the listing rules of a listing market in relation to that entity require the market operator to be notified of events or matters as they arise so the market operator can make it available to market participants.

(2)   If:

(a)   This subsection applies to a disclosing entity; and

(b)   The entity has information that it is required to notify the market operator of; and

(c)    That information:

                                           i.         Is not generally available; and

                                         ii.         Is information a reasonable person would expect to have a material effect on the price or value of ED securities of the entity, were it known;

The entity must notify the market operator.

Note 1: failure to comply is an offence: see s.1311(1)

Note 2: civil penalty provisions apply also: see 1317E and for relief s. 1317S

Note 3: An infringement notice may be issued: see 1317DAC

(2A) A person involved in a breach of ss. (2) contravenes this subsection.

(3)   For the purposes of ss. (2), with regard to the interests of a registered scheme, the obligation to notify the market regulator rests with the responsible entity.

(3A) For the purposes of ss. (2), with regard to the interests of a foreign passport fund, the obligation to notify the market regulator rests with the operator of the fund.

(4)   Nothing in subsection (2) is intended to affect or limit the situations in which action can be taken (otherwise than by way of a prosecution for an offence based on subsection (2)) in respect of a failure to comply with provisions referred to in subsection (1).

(5)   If the listing rules of a listing market in relation to a listed disclosing entity contain provisions of a kind referred to in subsection (1), the market operator must ensure that those provisions are available, on reasonable terms, to:

(a)   the entity; or

(b)   if the entity is an undertaking to which interests in a registered scheme relate—the undertaking’s responsible entity; or

(c)    if the entity is an undertaking to which interests in a notified foreign passport fund relate—the operator of the fund.

Note 1: failure to comply is an offence: see s.1311(1)

Penalty:

(2)   5 years imprisonment

(5)   2 years imprisonment

Summary/Indictable/mixed:

Mixed

Jurisdiction:

Local, District or Supreme Court

How committed:

(2)   Company A is about to launch a take over of company B, such information would affect the value of shares in the market. Proving this information to anyone other than the market regulator would be an offence.

Important note:

(2B) A person does not contravene subsection (2A) if the person proves that they:

(a)   took all steps (if any) that were reasonable in the circumstances to ensure that the listed disclosing entity complied with its obligations under subsection (2); and

(b)   after doing so, believed on reasonable grounds that the listed disclosing entity was complying with its obligations under that subsection.

(3B) For the purposes of an offence based on subsection (3), strict liability applies to paragraphs (3)(aa) and (b).

(3)   The provisions of Division 4 of this Part are additional to, and do not derogate from, Part 9.4B as it applies in relation to a contravention of this section.