FYI
From today’s AFR
This in no way is a put down of BPH but goes further to illustrate that
any company with Covid 19 in their announcements will be put under the microscope.
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THE ARTICLE FROM THE AFR
The corporate regulator is carefully scrutinising COVID-19-related disclosures and is concerned trading in shares by company insiders could be damaging given jittery markets.
Australian Securities and Investments Commission commissioner John Price said he supported efforts to protect companies hit by the coronavirus but will not tolerate anyone taking advantage of the crisis.
"We have made it quite clear we will be monitoring the market very closely, and in particular sharp practices that might be disadvantaging consumers,” Mr Price said.
A special team has been set up inside ASIC to monitor “people using very aggressive advertising and pressure selling tactics in this difficult time".
"If advertising is misleading or deceptive, or there are other problems with it, you can expect us to show quite a strong interest in that from an enforcement point of view,” he told a Governance Institute of Australia webcast on Monday.
ASIC's John Price: "We will ensure disclosure to the market is clear, accurate and meaningful." Paul Jeffers
ASX head of compliance Kevin Lewis said the exchange had discovered 50 misleading announcements relating to COVID-19, preventing most of them from being released while forcing the others to be amended or retracted.
Among them was Advance Nanotek, whose shares were suspended between March 16 to April 2, after the
ASX queried claims it had potentially discovered and patented an oral care product that could inhibit the coronavirus. It returned to the market after retracting all announcements relating to the treatment.
"That is a big focus for us as we stop people taking advantage of concerns around COVID-19," Mr Lewis said.
After ASIC released new guidance last week on share trading by directors and other company insiders, Mr Price said investors have a sharpened focus on announcements relating to securities trading - and so did ASIC.
“It follows that regardless of the motivation for trading, before doing so, directors and other insiders must be mindful of both legal restrictions that apply to buying and selling financial products, and also the impact the trading may have both on their reputation personally, the reputation of the company they are employs or represent and the broader market," he said.
Reporting leeway
Yet the market regulators said they are prepared to show leniency when companies are genuinely grappling with reporting obligations during the crisis.
Both ASIC and the ASX have already provided various waivers and concessions to rules including those relating to annual meetings, capital raising and financial reporting.
ASIC has said it will take “no action” for certain breaches. It is willing to go further, as companies with financial years ending at the end of June struggle to come to grips with quantifying the impact of the crisis.
“ASIC is very carefully considering at the moment how market conditions and COVID-19 developments are affecting financial reporting for entities with a June 30, 2020 balance date," Mr Price said. "We are quite sympathetic to various problems some of this cohort might face."
A specific announcement on measures relating to reporting for this year will be made by ASIC late this week or early next week.
Capital raising scrutiny
With $20 billion raised by 66 ASX-listed companies since March 22 , Mr Price said the ability to tap equity markets in a time of stress is a “vital aspect of Australia’s financial system”.
"However, I think it is important to know that the flexible arrangements that exist for listed entities to quickly raise capital need to be balanced against fairness considerations,” he added.
“We will be monitoring all capital raising activity completed in reliance of the ASX class waivers and also will be reviewing allocations and companies' disclosures to ensure disclosure provided to the market is clear, accurate and meaningful."
Of the $15 billion in capital raised by share placements since late March, the average discount has been 19 per cent, and the discount for an additional $2.7 billion raised via entitlement offers has been 28 per cent.
He said ASIC expects "transparent disclosure" about all factors that led boards to chose a particular capital raising structure.
ASIC “expects directors to use capital raisings to fulfil their obligation to act in the best interest of the company as a whole, and when selecting a structure for a capital raising, directors should have a clear understanding of the impact of the structure on existing retail and institutional shareholders,” Mr Price said.
Meanwhile, the Governance Institute of Australia has found almost 40 per cent of businesses are not regularly testing their risk and crisis plans and only 11 per cent are regularly running scenarios around risk events, to test how companies and employees will respond,
“COVID-19 has exposed some significant gaps in many organisations' crisis management and business plans,” said Governance Institute CEO Megan Motto
(20min delay)
