Continuous disclosure and electronic signing amendments passed
With regard to electronic execution, the amendments will expire on 31 March 2022 but Treasury intends to make them permanent. ASIC is now able to allow companies to hold virtual meetings, extend time limits for classes of entities to hold annual general meetings and modify the time and manner of lodgment of documents. Permanent reforms are now in place for virtual meetings and electronic lodgments in exceptional circumstances.
The continuous disclosure amendments cement temporary changes put in place for the period between May 2020 and March 2021. Chapter 6CA of the Corporations Act governs the requirement for listed entities to disclose information to the market operator.
The newly inserted s 674A introduces a civil penalty provision under which listed entities will incur liability for failing to meet those requirements only if the entity knows, or is reckless or negligent with respect to whether the information would, if it were generally available, have a material effect on the price or value of the entity’s securities. This replaces the “reasonable person” criterion for material effect formerly contained in s 674. The new s 675A relates to other disclosing entities.
For civil penalty proceedings claims, including class action lawsuits, the introduction of a “fault” element makes it harder to establish that a company has breached its continuous disclosure obligations by failing to disclose market-sensitive information.
Annotations to the current provisions of Chapters 6CA (Continuous disclosure) and 6D (Fundraising) of the Corporations Act in Robson’s Annotated Corporations Legislation have been revised by Catherine Merity and Rosamond Sayer of Maddocks. An update will be published in September 2021 and cover recent judgments relating to s 708A regarding relief from the requirement to issue cleansing notices.