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Highlights:
- ASX (ASX:ASX) will enhance its scrutiny on companies with poor disclosure practices, focusing on those whose actions fall short of market standards.
- The exchange operator will use its powers more aggressively in 2025, expanding its enforcement actions, including placing companies under trading halts and requiring third-party reviews.
- ASX will pay close attention to price movements following major announcements, especially when share prices spike by over 10%, as well as non-ASX 200 companies that may be engaging in questionable market practices.
The Australian Securities Exchange (ASX:ASX) is set to adopt a more aggressive stance toward companies that fail to meet proper disclosure standards, marking a significant shift in how it handles corporate transparency in 2025. The exchange has indicated that it will no longer tolerate inadequate disclosure practices and will be using its censure powers more frequently to ensure that companies are up to scratch in terms of the information they provide to the market.
Since the introduction of the ASX’s enforcement powers in 2019, companies that fall short of disclosure standards have faced public cautions or “please-explain” notices. However, in the upcoming year, the ASX plans to intensify its actions and scrutinize companies more closely. This includes actively engaging with boards when issues are identified, particularly when share price movements following announcements suggest a lack of sufficient forward guidance.
One area of focus for the ASX will be share price volatility. If a company’s share price spikes more than 10% following major announcements or results reports, the ASX will closely examine whether adequate disclosure has been made to the market. Such price movements can indicate a lack of clear communication or inadequate guidance, and the ASX aims to ensure that investors have all the necessary information to make informed decisions.
Additionally, the ASX is empowered to impose significant sanctions on companies, including placing them under trading halts or suspensions when there are concerns about the quality of their disclosures. The exchange can also require companies to engage third-party auditors to conduct reviews or audits, ensuring that proper disclosure policies are in place and adhered to. These measures are part of a broader strategy to increase transparency and hold companies accountable for their actions.
ASX Chief Compliance Officer Daniel Moran has made it clear that these tougher reviews will be part of the exchange’s strategy to address any lapses in corporate governance. According to Moran, the goal is to shine a light on any company that fails to meet the required disclosure standards, making it clear to investors that such behavior will not be tolerated.
The ASX will also be placing particular emphasis on companies outside the ASX 200, especially those that may be engaging in practices designed to artificially inflate their share prices. These companies may release overly polished announcements or use other tactics to manipulate market perceptions. The ASX has indicated that it will be vigilant in monitoring such activities, with a particular focus on preventing any form of market manipulation or “pumping.”
This crackdown on poor disclosure practices comes as the ASX seeks to bolster investor confidence and maintain the integrity of the Australian financial markets. By taking a more proactive approach, the exchange aims to ensure that companies are held to high standards of transparency, helping to foster a fairer and more accountable market environment.
While the ASX’s actions are expected to have an immediate impact, they will likely set the tone for a broader shift in corporate behavior across the Australian market. Companies will need to ensure that they are providing accurate, timely, and comprehensive information to investors, or risk facing heightened scrutiny from the ASX.
As the ASX embarks on this more aggressive approach to corporate governance, it is clear that the exchange is committed to upholding the integrity of the market and protecting investors from potential risks associated with poor disclosure practices.
