The COVID-19 crisis has caused extreme market volatility and ongoing uncertainty. This poses particular challenges for boards and companies required to comply with continuous disclosure and misleading and deceptive conduct laws that are amongst the strictest in the world. It also creates a materially heightened risk of opportunistic securities class actions led by litigation funders.
The AICD proposes a targeted solution that is directed at the specific disclosure challenges presented by COVID-19. In brief, we are proposing that the Corporations Act be amended via the Treasurer’s new power to provide that, so long as disclosure decisions are made in good faith, only ASIC can take action against listed disclosing entities or their directors or officers in relation to earnings guidance or forward-looking statements about company performance made in the context of the COVID-19 pandemic. This would complement the existing powers the ASX has to take enforcement action in response to deficient disclosure.
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