Widening the Net: Accessorial Liability for Continuous Disclosure Contraventions

Abstract

Australia's continuous disclosure laws impose a regulatory burden on disclosing entities to ensure that all relevant information is accurately disclosed to the market in a timely manner. This regulatory burden is an important mechanism to encourage investor confidence in the quality and value of our capital markets. It is also important however that the system of continuous disclosure creates appropriate economic incentives for listed entities to voluntarily comply with the law. These incentives should fall not merely on the corporate entity but also on those involved in the regulatory contravention. This article examines the scope of accessorial liability for breaches of continuous disclosure laws. It advocates greater use of this legislative tool to ensure that the burden of continuous disclosure breaches falls on the persons responsible for the failure and not merely on the company's shareholders who may already have been penalised. A range of options are canvassed, in particular the establishment of an expert peer review panel, to facilitate this aim.

Keywords: continuous disclosure, real time disclosure, director liability, public and private enforcement, securities class actions, investor rights

JEL Classification: K22