Continuous Separation Principles External -Myassignmenthelp.Com

Question: Discuss About The Continuous Separation Principles External? Answer: Introduction The continuous disclosure regime of ASX plays an important role for the listed companies of Australia. The continuous disclosure regime states that it is the obligation of the ASX listed companies to disclose price sensitive information about securities to the investors and shareholders under the Lasting Rules of 3.1 and 3.1A (Hsu, Lindsay and Tutticci 2012). According to Australian Securities and Investment Commission (ASIC), the inclusion of continuous disclosure regime helps in the restoration of efficiency and integrity of share market. However, in the recent years, many questions have been raised regarding the necessity and effectiveness of continuous disclosure regime for the Australian companies. For establishing the necessity and effectiveness of continuous disclosure regime, it is required to analyse and evaluate different substance of continuous disclosure regime (Matolcsy Tyler and Wells 2012). This report takes an honest attempt to establish the importance of continuous d isclosure regime for Australian companies by analysing various aspects of it. In this process, this report highlights the main principles of continuous disclosure regime for the ASX listed companies. Disclosure Regime of Australia In the recent years, both ASIC and ASX have felt the necessity of establishing continuous disclosure regime for the ASX listed companies. In the year 1994, the inception of the existing continuous disclosure regime can be seen and it can be spotted under Chapter 6CA (Sections 674 678) Corporations Act through ASX Listing Rules (Chapter 3) (Lumsden 2012). According to this particular legislation, it is the obligation of all ASX listed organizations for the disclosure of prise sensitive share information that have material effect o the share and securities prices. More specifically, under this act, Guidance Note 8 states that it is the obligation of the ASX listed organizations for the disclosure of price sensitive information as soon as they become aware of it. Under the same act, the Principle 5 in ASX Corporate Governance Principles and Recommendations states that complying with the continuous disclosure regime is an important aspect for the minimization of information asymmetry be tween the investors and managers of the organizations (Tricker and Tricker 2015). In addition, it is also required for establishing effective governance in the share market. In the whole process of continuous disclosure regime, the important role of ASIC cannot be ignored. It is crucial to mention that it is under the authority of ASIC to take effective legal actions against the companies responsible for the violation of the principles of continuous disclosure regime (Worthington 2013). Companies under ASX have the authority to handle the rapid infringement notices; but organizations know the way to evade these notices in the cheap way by minimally affective their market reputations. For this reason, the policing activities of ASIC have much importance for judging the extent of continuous disclosure regime for the Australian companies. In this regard, the commissioner of ASIC said in a presentation to Australian Investor Relations Association (AIRA) that ASIC has presently 28 cases of insider trading in which they have been able to solve 18 cases and there are still 5 cases yet to be solved (Chang, Hooi and Wee 2014). Apart from this, ASIC has mentioned that the number of the cases of insider trading has increased rapidly and thus, continuous disclosure regime has an important role to play in the minimization of insider trading. Principles of Continuous Disclosure The major principles of continuous disclosure regime are mentioned below: It is required for the ASX listed companies to disclose adequate amount of share information for the shareholder and investors so that they can effectively judge the price of the shares and securities (Seamer 2014). It is the responsibility of the ASX listed business organizations to disclose the price sensitive information that can have material impact on the price of the shares and the companies are required to disclose them as soon they receive them. It needs to be mentioned that the companies are required to release them when it is evident that disclosure could not be withheld anymore (Chapple and Truong 2015). It is required for the ASX listed business organizations for the disclosure of price sensitive share information on an equal basis so that the investors and shareholders can take advantage from them. In this context, it is essential to remove selective disclosure in order to retain the integrity of share market (Kent and Zunker 2013). The presence of continuous disclosure regime plays an important role in striking an appropriate balance between the release of adequate share information and the restriction of earlier disclosure of this important share information. On the other hand, it is the restriction on the companies for the development of speculative environment with the help of various conflicting information of share prices (Watarai 2013). The continuous disclosure regime also an important tool for developing a balance between the disclosure of price sensitive share information and protecting the commercial interest of the investors and the shareholders. In addition, the business partners and advisors cannot use the earlier obtained information in order to trade in the share market of Australia (Chang, Hooi and Wee 2014). Most importantly, the continuous disclosure regime plays an integral part in maintaining the confidentiality of the information of investors and shareholders. It needs to be mentioned that it is the responsibility of the ASX listed companies to release the share information of the investors and shareholders on a timely basis and the quality of information must be there (Kathy Rao, Tilt and Lester 2012). It is the right of the ASX listed companies for getting continuous guidance in order to be associated with the principle and regulations of continuous disclosure regime. Apart from this, there is a mention of effective penalty for the companies responsible for the vilation of the principles of continuous disclosure regime (Chang, Hooi and Wee 2014). Selective Disclosure There is a close association between insider trading and selective disclosure. Share market is largely dependent on the flow of information and it cannot be done in the cost of efficiency and equality. In this process, the confidence of the investors should not be affected. As a part of this, the process of selective disclosure creates obstacle to bring loyalty in the share analysis, put restriction on the investors so that they do not be able to obtain equal information, affecting the market transparency and to spoil the confidence of the investors and shareholders (Marquis, Toffel and Zhou 2016). In the process of selective disclosure, it can be seen that the business organizations use to choose the disclosure of selective share information so that they can get favourable results; but these results do not have any connection with the goals and objectives of the companies. Apart from this, in the presence of selective disclosure, institutional investors get the option for the extrac tion of preferred share information of the ASX listed companies with the assistance of private briefing (Fisher 2015). However, the importance of selective briefing cannot be ignored as it is important to fill the gap of the share price analysis and the investors get great benefit from this. In this aspect, level the playing is an important part as it is helpful for getting the access of required information. Most of the organizations like in the adoption of the process of share information. For all these reasons, ASIC has recently initiated the surveillance on the price sensitive information. Surveillance The current process of ASIC in order to carry out the process of spot check of selected organizations has not been implemented properly. The presence of major complexities for the process of effective monitoring and the process of criminal proceeding can be held responsible for this. Moreover, the total cost of ASIC is needed to be taken into consideration and thus, it is required to have strict laws. At the same time, there is a strong need of effective governance that is required to be implemented alongside the required regulations (Yanco 2013). For all these reasons, the surveillance program of ASIC plays an important role for continuous disclosure regime. Conclusion As per the above discussion, it can be seen that continuous disclosure regime plays an important role for the ASX listed organizations in the disclosure of price sensitive share information. As per the above discussion, the effectiveness of continuous disclosure regime can be increased by the participation of authorities like ASIC and others. In addition, it can also be observed that it is the responsibility of the ASX listed companies to comply with the principles of continuous disclosure regime. Thus, based on the above discussion, it can be concluded that continuous disclosure regime has its necessity as well as effectiveness for disclosing adequate information for the companies, References Annualreports.com. (2018).Annual Report 2015-16. [online] Available at: https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BAL_2016.pdf [Accessed 17 Jan. 2018]. Chang, M., Hooi, L. and Wee, M., 2014. How does investor relations disclosure affect analysts' forecasts?.Accounting Finance,54(2), pp.365-391. Chang, M., Hooi, L. and Wee, M., 2014. How does investor relations disclosure affect analysts' forecasts?.Accounting Finance,54(2), pp.365-391. Chapple, L. and Truong, T.P., 2015. Continuous disclosure compliance: does corporate governance matter?.Accounting Finance,55(4), pp.965-988. Fisher, C., 2015. 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