Under the amendment to the Corporations Act 2001 (Cth), directors and companies will be liable for continuous disclosure law breaches only where they acted with "knowledge, recklessness or negligence" with respect to updates on price sensitive information to the market.
AICD CEO and Managing Director, Angus Armour said, "We congratulate the Government on this move which brings Australia closer into line with the rest of the world.
"The AICD believes continuous disclosure is fundamental to a functioning market and it's important to recognise that this move maintains Australia's robust continuous disclosure obligations.
"When these measures were originally introduced as a COVID-19 relief measure, our market integrity was sustained because the obligation on directors and companies to disclose information did not change and it does not change now - those who do the wrong thing will still be subject to the full force of the law.
"This reform provides greater certainty for companies to make disclosures to the market, without the apprehension of speculative class actions challenging this disclosure with the benefit of hindsight, and that is in everyone's interest.
"We are hopeful that overtime these changes will also help to rebalance skyrocketing insurance premiums," Mr Armour said.
The reform package will also extend the relief for the holding of virtual AGMs, sending meeting related materials to shareholders electronically and signing corporate documents electronically until 31 March 2022 – providing very welcome certainty with the ongoing disruption due to COVID-19.
In a welcome step, the Government has also proposed separate legislation that would permanently allow virtual AGMs (subject to a company's constitution requirements) electronic document execution and electronic shareholder communications.
Mr Armour said, "The COVID-19 pandemic has shown that resilience requires flexibility and this reform provides us with the options we need.
"These modernisations will allow for on-going accountability through visibility and accessibility by giving companies the opportunity to engage virtually with their shareholders across the community and give more certainty for planning AGMs."
