The latest ASX companies update released on 22 January 2009 has provided a reminder to listed entities of their obligations under ASX Listing Rule 3.1 that:

Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must tell ASX that information.

More specifically, the recently released ASX company update has reminded listed entities that the entity is required to keep the market informed of expected material differences in the entity's financial performance.

In the current financial downturn, profits are expected to fall for a large number of companies. It is therefore critical that companies understand their continuous disclosure obligations to generate market releases about expected financial results.

When should an entity disclose material differences in its financial performance?

Entities are required to make an immediate appropriate announcement when they become aware of an expected material difference in the financial results for that period from the results that were recorded in the previous period, or from forecasts for that period that have been provided to the market by the entity and (in appropriate cases) from analysts' consensus forecasts.

Can the entity delay disclosing the information until the next financial report?

It is not acceptable for the release of such information to be delayed until the release of the periodic financial report or statutory financial report, or until the release of the information has been considered by the board.

When will the ASX review the entity's previous announcements to determine whether the entity has complied with Listing Rule 3.1?

Where an entity reports results that have varied by greater than 10% to 15% from, for example, results of a previous corresponding period, the ASX will undertake a review of previous announcements made by the company during and after the financial reporting period to determine if continuous disclosure obligations have been met.

What steps will the ASX take if the entity does not disclose a material difference?

After the ASX has reviewed the entity's announcements and it does not appear that an announcement indicating the likelihood of a material variation in the results had been released prior to the release of the periodic financial report, the ASX may initiate a formal examination process (commencing with asking the listed entity to show how it complied with its obligations) followed by disciplinary action.

Copies of correspondence between ASX and the entity may be released to the market.

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