The Federal Government will extend temporary continuous disclosure provisions that apply to companies and their officers’ for a further six months until 23 March, 2021, to continue to provide regulatory relief for businesses that have been impacted by COVID-19.
This would extend the existing relief which temporarily amended the Corporations Act 2001 so that companies and officers remained liable where there had been “knowledge, recklessness or negligence” with respect to updates on price sensitive information to the market.
The extension would be made under the instrument-making power that had been inserted into the Act as part of the Government’s response to COVID-19.
Treasurer, Josh Frydenberg, said the heightened level of uncertainty around companies’ future prospects as a result of COVID-19 exposed companies to the threat of opportunistic class actions for allegedly “falling foul” of their continuous disclosure obligations if their forecasts in the middle of a pandemic were found to be inaccurate.
“In response, companies may hold back from making forecasts of future earnings or other forward-looking estimates, limiting the amount of information available to investors during this period,” Frydenberg said.
“Importantly, evidence to date shows that the temporary exemption has assisted companies to continue to update the market during this difficult and uncertain time.
“In fact, Treasury has identified that there has been an increase in the number of material announcements to the market during the period the relief has been in place, relative to the same period last year.
“So while this temporary measure has not detracted from information being provided to the market, it has made it harder to bring such actions against companies and officers during the COVID-19 crisis and while allowing the market to continue to stay informed and function effectively.”
