Writing in today’s The Australian, corporate and M&A partner Jeremy Lanzer warns that when AGL recently received an “Aware Letter” from the ASX so soon after releasing its full-year results, it confirmed what many directors suspected: earnings season is no longer just about profits. It is also a test of disclosure discipline.
Noting that Baby Bunting Group had also been queried by the ASX about the timing of its market disclosures, Jeremy argues that the ASX is actively deploying aware letters as a tool against companies whose results trigger sharp price movements.
“In June of this year, the exchange made clear it would police ‘market-sensitive earnings surprises’ more aggressively. It told the market that any results announcement that drives a share price move of 10 per cent or more would likely trigger an aware letter, demanding directors explain when management knew of the divergence and why the market was not told earlier. That warning is no longer theoretical.
“The experience of AGL and Baby Bunting Group demonstrates that the ASX is prepared to challenge boards in real time, holding them accountable not just for financial results but for the governance process that led up to them.”
