ASIC chair Joe Longo has urged Australian listed entities to maintain a special focus on transparency and engagement amid an evolving regulatory landscape.
In a speech to the Australasian Investor Relations Association (AIRA) Forum on Tuesday, Mr Longo said greater transparency and engagement is needed across the board in three areas in particular: continuous disclosure, sustainable finance, and stakeholder responsibility and activism.
According to Mr Longo, continuous disclosure is “fundamental to maintaining market integrity, and keeping that market fully informed”.
“ASIC will take action against poor practices in this area,” he warned.
Mr Longo highlighted the Federal Court’s largest-ever penalty for breaching continuous disclosure laws handed down in February this year against disgraced software company GetSwift, which was slapped with a $15 million fine.
“These penalties show the extent and seriousness of misconduct in this matter and the importance of deterring others from engaging in similar behaviour. ASIC will continue to take action to hold companies and individuals to account for corporate misconduct of this kind,” said Mr Longo.
The ASIC chair also pointed to the regulator’s landmark case against ANZ, which last month was found to have breached continuous disclosure laws when it undertook a $2.5 billion institutional share placement in 2015.
“It clearly confirms that a significant take-up of shares by underwriters in a capital raising may be considered price sensitive information requiring market disclosure,” Mr Longo said.
He stressed that ASIC’s role is to ensure “a fair, strong, and efficient financial system for all Australians”.
“And market integrity – and confidence in that integrity – is an essential part of that.
“This is why continuous disclosure should be continuously front-of-mind – to build and maintain confidence and integrity,” he said.
Turning to sustainable finance, Mr Longo said it’s time for companies to begin engaging with the proposed climate disclosure requirements.
“Start considering what systems, processes and governance practices will need to be put into place to ensure your company is well placed to start reporting under a mandatory climate reporting regime in Australia,” he advised.
In this environment, Mr Longo said transparency and trust must be the focus.
“When companies don’t or can’t substantiate what they’re saying to investors and the market, this erodes trust.
“I’m talking, of course, about greenwashing. This has been an enforcement priority for ASIC for some time now – so it’s up to you to make sure you can and do substantiate any and all claims relating to sustainable finance”.
Finally, on stakeholder responsibility and activism, Mr Longo said shareholders and potential investors play a key role in keeping company boards accountable.
“Shareholders exercising their rights should sharpen the focus of every board. And, as investor relations professionals, this managing the relationship between shareholders and companies goes a long way towards improving a company’s governance and accountability. That means ensuring shareholders have the information they need, and sharing and acting on feedback they give,” he said.
In conclusion, Mr Longo said transparency and engagement are at the heart of business and investor relations.
“This means there should be a special focus on keeping those front of mind when it comes to continuous disclosure obligations, sustainable finance reporting, and shareholder responsibility and activism.”
“A strong, fair, and efficient financial ecosystem can only be built upon the foundations of consumer and investor confidence. And transparency and engagement are how we lay those foundations.”
