In Compliance Update No. 06/25, ASX introduced a new ‘close review’ procedure to address instances where an entity has seriously and repeatedly fallen short of the disclosure standards of a listed entity. The purpose of this measure is to improve disclosure practices and ensure that ASX can maintain confidence in the integrity of the Market Announcements Platform.
Normal processes for market announcements
In the ordinary course, announcements lodged via the ASX Market Announcements Platform undergo a brief on-screen review by specialist staff. This quick review focuses on whether the announcement has been lodged by an authorised source, whether it materially affects another listed entity, whether it is likely to be market sensitive and whether any system generated warnings in relation to an online form require resolution. This level of screening supports prompt release of information and is not intended to examine the substantive content in detail.
Close review procedure
If ASX has major concerns about an entity’s disclosure practices, it may now impose a ‘close review period’, typically lasting six months. During this time, all announcements other than periodic reports and administrative notices will be subject to the following additional scrutiny:
- The announcement will be sent to the ASX Compliance team for review before release.
- The announcement will be assessed for compliance with the listing rules and consistency with relevant guidance.
- ASX Compliance will determine whether the entity has correctly characterised the likely market sensitivity of the announcement.
To publicly signal the commencement of the close review period, ASX will release an announcement under the entity’s ASX code. ASX may also publish a list of all entities currently under close review on its website.
These additional steps are likely to cause delays in the release of announcements. Affected entities must consider the extended timeframe when planning releases, including requesting a trading halt for market-sensitive information pending ASX’s review. If concerns are not resolved, ASX may suspend trading until the issues are rectified.
Triggering the close review procedure
ASX expects to use this procedure sparingly, with ideally no more than a handful of entities under close review at any time. Circumstances that may trigger ASX’s concerns include:
- repeated requirements to amend or withdraw announcements prior to release;
- the need to issue clarifications, corrections or retractions, or a refusal to do so when warranted;
- announcements that are inconsistent with ASX guidance;
- failure to address disclosure issues previously raised by ASX; and
- poor cooperation or difficulty in contacting the entity regarding disclosure matters.
Before applying the close review procedure, ASX will privately notify the entity outlining its concerns and invite submissions on the proposed action or any alternative approach.
Implications for entities
Entities subject to close review must promptly take steps to improve their disclosure practices to ASX’s satisfaction. If those improvements are insufficient, ASX may:
- extend the close review period;
- require additional remedial actions;
- impose enforcement measures, such as censure; or
- initiate removal from the official list.
If the close review period continues for more than 12 months without adequate progress, ASX is likely to require the entity to show cause why it should not be delisted.
Next steps for entities and advisers
Listed entities should familiarise themselves with ASX’s disclosure guidance, including Guidance Notes 8 and 14, as well as other ASX updates addressing specific disclosure issues. Proactive engagement with the ASX Compliance team, along with robust internal procedures for preparing announcements, will help reduce the risk of being placed under close review. Entities should also review their compliance frameworks and seek advice where necessary to ensure they meet ASX’s expectations.
This article was written by David Naoum, Partner and Lachlan Pearce, Solicitor.
