Letter to the editor - The West Australian, 21 May 2016

The recent article 'Scope of Noble Plan Thwarted by Reality', (West Australian, 7-8 May) covering disclosure rules for mining companies, gave rise to suggestions the goalposts had somehow shifted to prevent start-up or small businesses from attracting investment capital. 

This was in reference to an ASIC Information Paper released in April on forward-looking statements in the mining and resources sector.

I would like to make one thing clear: the law has not changed, and nor has ASIC's interpretation or enforcement of it. The paper simply draws together and explains the existing rules and reference sources in a useful 'one stop shop' guide with hypertext links to help reduce business costs and the risk of litigation and regulatory action, including class actions.

Indeed, we developed it at the request of industry, and have worked in close collaboration with industry bodies and regulators for around two years to achieve the best possible guidance for both businesses and investors.

The cyclical nature of the commodities and resources sector is well-known, and ASIC is as keenly aware as the industry that attracting investment in recent times is a challenge. The law and associated rules have always allowed for that, as does ASIC's guidance on them.  

The existing laws provide that companies should have "reasonable grounds" for any projections, be they of its prospectivity or business case. It is obvious that predictions made without any reasonable foundation whatsoever will be unreliable, irrelevant and misleading.

The requirement of reasonable disclosure applies to all companies in all industries in Australia. It captures the spirit of the world-renowned JORC code, the rules hammered out by Australian industry, legislators and regulators 40 years ago to prevent a repeat of the treacherous Poseidon-style booms and busts that inhibited real wealth creation for so long. 

The credibility that provided has made the Australian mining and resources sector a world leader and helps explain why they comprise 47% of Australia's 2,200 listed companies.

Long may that continue.

John Price,

Commissioner,

Australian Securities & Investments Commission (ASIC)