In a compliance update released on 15 March 2018, the ASX has highlighted recent incidents where disclosures by listed entities about their contractual arrangements with customers has fallen short of the required standards.

Section 4.15 of Guidance Note 8 provides that announcements regarding the signing of a market sensitive customer contract should generally include information about:

• the name of the customer;
• the term of the contract;
• the nature of the products or services to be supplied to the customer;
• the significance of the contract to the entity;
• any material conditions that need to be satisfied before the customer becomes legally bound to proceed with the contract; and
• any other material information relevant to assessing the impact of the contract on the price or value of the entity’s securities.

The ASX has used this compliance update to remind listed entities that, if a listed entity fails to comply with the required disclosure requirements, the ASX will not hesitate to suspend the entity, query it and require it to correct any inadequate or misleading disclosures. The ASX will also refer the entity to ASIC to consider regulatory action.

Listed entities should also be aware of the significant criminal and civil consequences that can apply where a market announcement does not meet the requirements of Listing Rule 3.1 or is misleading or deceptive.  These potential consequences are set out in Annexure B of Guidance Note 8.

Click here for a link to the ASX compliance update.

For more information on the disclosure requirements relating to customer contracts, and for general ASX Listing Rule compliance advice, please contact:

Craig Sanford, Director, Sierra Legal, M: +61 (0)416 052 115 or E: csanford@sierralegal.com.au

Mike Jeffery, Director Sierra Legal, M: +61 (0)402 745 054 or E: mjeffery@sierralegal.com.au

Kenneth Gitahi, Senior Associate, Sierra Legal, M: 61 (0)401 450 220 or E: kgitahi@sierralegal.com.au