SYDNEY (Reuters) – Australia extended by six months its temporary relaxation of company disclosure obligations, including allowing businesses to avoid releasing earnings forecasts, in a bid to shield them from lawsuits during the coronavirus pandemic.
The government in May amended corporate laws to protect companies and their officers so they can only be held liable for market statements if there had been “knowledge, recklessness or negligence”.
“Given the impact of COVID-19 and the uncertainty it generates, it remains considerably more challenging for companies to release reliable forward-looking guidance to the market,” Federal Treasurer Josh Frydenberg said on Wednesday.
Frydenberg said uncertainties due to COVID-19 had exposed companies to “the threat of opportunistic class actions” over alleged failures on disclosure obligations if their forecasts in the middle of a pandemic were found to be inaccurate.
These temporary changes will run until March 23, 2021.
Australia’s corporate regulator, meanwhile, extended temporary rules that made it easier for listed companies to raise capital and shore up their balance sheets during the pandemic.
The Australian Securities and Investments Commission (ASIC) in March said it would allow companies to issue rights offers, placements and share purchase plans, even if they fall short of usual regulatory requirements.
The rules have been extended until the end of this year.
Australia has provided regulatory relief for businesses during the COVID-19 crisis. Earlier this month, the government extended the temporary insolvency and bankruptcy protection rules until the end of this year.
Australia has avoided the high rate of virus deaths seen in other developed countries thanks to strict restrictions, but the pandemic has still wreaked havoc on the economy.
To cushion the blow, Australia has rolled out stimulus packages worth about A$314 billion ($225 billion).
(Reporting by Renju Jose; Editing by Stephen Coates and Gerry Doyle)
