Australia lowers bar on public companies’ disclosures, extends virtual AGMs

Office buildings are seen amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020. Picture taken June 3, 2020. REUTERS/Loren Elliott

SYDNEY, Aug 10 (Reuters) – Australia on Tuesday eased so-called continuous disclosure laws for publicly listed companies, which will now protect companies and their officers against liabilities for misleading and deceptive statements or forecasts unless “fault” is proven.

The new laws come as part of a broader clamp down on the litigation funding industry following a surge in costly class action lawsuits.

“These changes will mitigate the risk of companies and their officers being subject to opportunistic class actions under our continuous disclosure laws and in doing so, will support companies and their officers to release forward-looking guidance to the market,” Australia’s Treasurer Josh Frydenberg said in a statement.

“Introducing a fault element will more closely align Australia’s continuous disclosure regime with that of the United States and the United Kingdom.”

The new rules come as the corporate regulator pursues newly listed software company Nuix Ltd (NXL.AX) for allegedly providing misleading forecasts in its prospectus ahead of its IPO, the country’s largest in 2020. read more

The government also passed laws allowing companies to hold annual shareholder meetings or AGMs virtually, instead of in-person, and to execute documents electronically until March 31 next year.

The emergency relief had been introduced as a work-around COVID-19 lockdowns that restricted movement and confined officials and investors to their homes.

But officials also said on Tuesday they would seek to extend that relief indefinitely, even as concerns among investors rise that virtual meetings can limit investor’s ability to hold executives to account. read more

“With the extension of this temporary relief, the Government will now seek to introduce permanent reforms later this year to give companies the flexibility to use technology to hold meetings, such as hybrid meetings, and sign and send documents,” Frydenberg said.

“The Government is committed to ensuring that businesses can comply with their regulatory requirements while dealing with the COVID-19 pandemic and that regulatory settings going forward support Australia’s economic recovery.”

Reporting by Paulina Duran in Sydney; Editing by Simon Cameron-Moore

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