In this update we explore the changes to ASX Online and the two additional functionalities a Listed Investment Company (LIC) must now consider when lodging market announcements. The anticipated ‘go live date’ is Monday, 6 August 2018.
Overview
The ASX has proposed that every announcement lodged by an LIC via the Market Announcement Platform must indicate whether the announcement:
- is ‘market sensitive’ or ‘non-sensitive’; and
- materially relates to or affects another listed entity and therefore should be cross-released against the name of that entity on the Market Announcement Platform. The ASX have confirmed that the Market Announcements will continue to make the final assessment of sensitivity and whether an announcement is cross released prior to the release of the announcement.
The start date for this self assessment regime is scheduled for 6 August 2018.
Consequence of Price Sensitive Tag
During trade, if an announcement is marked as ‘price sensitive’, it will automatically halt trading for 10 minutes (or in the case of a takeover announcement or scheme of arrangement, 1 hour). These pauses in trading are to allow investors sufficient time to absorb price sensitive information.
Impact on LIC Announcements
The ASX does not have clear guidance on what makes an announcement price sensitive. First principles dictate that once a company is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities, the entity must immediately tell the ASX that information (LR 3.1).
Therefore a LIC may argue that all information it releases should be considered price sensitive. However, this is not in the spirit of the ASX’s intention.
Based on historical use of Price Sensitive Tags and Cross Release of announcements by the ASX, we propose the following for announcements in the LIC space:
| Announcement | Price Sensitive* | Cross Release * |
|---|---|---|
| Appendix 4D – Half Year Report | YES | NO |
| Appendix 4E – Preliminary Final Report | YES | NO |
| Audited Financial Report | YES | NO |
| Dividend Declaration | YES | NO |
| Commencement of On-Market Buyback | YES | NO |
| Chairman’s Address to Shareholders | YES | NO |
| Monthly NTA Announcement – Standard Performance | NO | NO |
| Monthly NTA Announcement – Non-Standard Performance | YES | NO |
| Estimates – Standard Performance | NO | NO |
| Estimates – Non-Standard Performance | YES | NO |
| Substantial Shareholder Announcement | NO | YES |
| Takeover Action or Scheme of Arrangement | YES | YES |
| Notice received under s249D, 249F, 249N, 252B, 252D or 252L | YES | YES |
* Discretion on Nature and Scale to be applied
Changes to Policy
LICs may consider whether a disclosed policy around Price Sensitivity will need to be adopted.
The main question to be answered is what % change to pre/post tax NTA require a “price sensitive” tag to be applied. This discussion will be relevant to estimates as well as the mid-month NTA.
Changes to Announcement Templates
LICs may also consider whether it is appropriate to amend existing ASX Announcement templates to include an identifier which discloses the tag applied to each announcement (“price sensitive” or “non-price sensitive”).
This update is prepared by the Company Secretarial Team at Boardroom Pty Limited. The update is designed to provide general information and is not designed to replace legal or tax advice or a detailed review of the subject matter nor is it intended to cover all circumstances.
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