CODEWORD

Recently, the Panel was presented with a situation where it had to consider how an incorrect statement should be addressed once it had been made publicly. This article is a reminder as to the Panel’s expectations when this situation arises.

First, the Panel expects public documents and statements to be accurate. If any issues of accuracy are identified, the Panel recommends market participants engage with the Panel executive as soon as possible. If an error occurs in a public document, the Panel’s priority is to ensure that the error is corrected by the provision of corrected information in a prompt, pro-active and thorough manner to ensure the disclosure is equivalent to what should have been provided.

After the Panel is satisfied that shareholders have accurate information, the Panel will consider whether further enforcement action is appropriate.

Market participants should be aware that when the Panel considers what (if any) enforcement action to take in relation to an error, the Panel will consider the effect of the error, the approach already taken in correcting the error, and whether further corrective action is appropriate in the circumstances. The factors that the Panel will consider may vary on the circumstances, but are likely to include:

• the significance of the error and its effect on shareholders (this may include consideration of the complexity of the issue and how best to communicate the relevant information to shareholders);
• how quickly the corrective disclosure was provided to shareholders after the error was identified;
• the manner in which the corrective disclosure was provided – i.e., was it appropriately drawn to shareholders’ (or other relevant parties’) attention in an accessible way;
• how long shareholders (or other relevant parties) have to consider the corrective information;
• the approach taken in relation to shareholders that may have voted on or accepted an offer prior to the error being corrected.

Finally, the Panel understands that transactions may require large quantities of information to be gathered, collated and presented. Inadvertent errors can occur even where parties have undertaken due diligence and verification procedures. The circumstances giving rise to an inadvertent error, including due diligence and verification procedures followed by a party, may be a factor the Panel considers when deciding what (if any) enforcement action is appropriate.

The Panel executive is available to review and comment on corrective disclosure and the steps taken to rectify an issue.