ASIC Stance on Corporate Disclosure 'flawed': CICSA

The Chartered Institute of Company Secretaries in Australia (CICSA) has sharply criticised much of the overhaul of corporate disclosure rules proposed by the Australian Securities and Investment Commission (ASIC) in a submission to the regulator.

The CICSA submission was made in response to a draft ASIC guidance and discussion paper, "Heard it on the grapevine .....", released in November. The Institute has attacked the Commission's direction as opposed to the corporate trend of simplified laws and self-regulation.

"Given this and that many advocated measures are so over-arching as to be unworkable," CICSA chief executive, Mr Tim Sheehy, said today, "we believe that some aspects of the Commission's current approach are misguided and counterproductive to good corporate disclosure."

In its submission, CICSA endorsed the role of company secretaries in relation to corporate disclosure, as set out in the Commission's paper. The Institute's view is that, where appropriate, company secretaries are ideally placed and qualified to be responsible for managing disclosure in both large and small companies.

"In other respects, however, the Commission's paper contains flaws," Mr Sheehy said. "The impracticality of a number of implementation measures proposed in the paper, the inaccuracy of some key assumptions especially in the discussion section, and the fact that legislation currently exists to cover many of the issues, are of concern to the Institute."

CICSA's submission focused on references in the ASIC paper to a negative perception in the general community that Australian companies are involved in activities that constitute selective disclosure and are not complying with continuous disclosure rules.

"The Institute's experience is that the overwhelming majority of companies go to considerable lengths to ensure fair and full disclosure and make every effort to comply with existing legislation and regulations," Mr Sheehy said.

"There is minimal, if any, evidence that such a negative perception exists in the community. Premises relating to selective disclosure and non-compliance by companies, whether inadvertent or not, are unjustified and inaccurate."

In the submission, CICSA also challenged ASICs approach in its paper to:

  • private briefings held by companies with stockbroker analysts and institutions
  • the value of the Internet, given 39 per cent of listed companies lack a web site
  • the media, and the lack of any reference to their briefings by companies
  • the different types of information related to corporate disclosure
  • the various levels of contact between companies and other parties
  • placing all broker reports and tapes of briefings on their web sites
  • having two company representatives attend all discussions involving disclosure

CICSA queried whether the tendency to overkill in the Commission's paper was an
indication that ASIC was unwisely following public policy trends in the United States.

Many US companies receive little or no analyst and media coverage, and there have been cases of some companies entering into arrangements in which privileged access to information is exchanged for coverage. The Institute's submission contended that any comparison between the US and Australia in this regard would be dubious, and issues relating to corporate disclosure here need to be viewed in a significantly different context.

"We are adamant that legislation already exists to cover the issues in the ASIC paper," Mr Sheehy said. "Our key concern is that the implications of the paper are that the Commission may introduce further regulation on companies, and that they would have to bear the cost of implementing such regulation."

For more information and comment, please call Tim Sheehy on 02 9223 5744 or Vivienne Hardy at Intersection Services Marketing on 02 9247 3782

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