The ASX has recently updated Guidance Note 8 (Continuous Disclosure) to address the practice of listed entities commissioning and publicising research reports which include objectionable material that the entity itself could not publish (e.g. information about exploration results, mineral resources, ore reserves or a production target that does not comply with the JORC Code or research reports with an estimate of earnings or other forward looking financial information that does not meet the requirements of relevant ASIC Regulatory Guides).

Section 4.15 of Guidance Note 8 now states that:

Generally speaking, an entity should not submit:

• a broker or analyst research report about the entity; or
• an announcement about the issuance of, containing an extract from, or referring or including a hyperlink to, such a report,

for publication on the ASX Market Announcements Platform under Listing Rule 3.1. Any market sensitive fact-based material in such a report should already have been released by the entity under that rule beforehand and so it can reasonably be inferred that the entity is seeking to publish or draw attention to the report for its opinion-based material (such as the broker’s or analyst’s buy recommendation, price target or earnings estimates).  This will raise an issue about whether the report is really being published for promotional rather than informational reasons.  It may also raise concerns about whether the entity is impliedly endorsing any price target, earnings estimates or other forward looking financial information in the report.  For these reasons, ASX is likely to refuse to allow an entity to publish such a report or announcement on the ASX Market Announcements Platform without a detailed and acceptable explanation as to why the entity considers this information to be market sensitive.

If an entity does happen to publish such a report or announcement on the ASX Market Announcements Platform without pre-clearing it with ASX Listings Compliance, ASX may require the entity to make a further announcement addressing the concerns mentioned in the preceding paragraph.  Further, if the report contains material that ASX considers objectionable, ASX may also require the entity to publish an announcement withdrawing or retracting the objectionable material and advising investors not to make any investment decision based on it.

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

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

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