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17-386MR MG Responsible Entity Ltd admits to continuous disclosure contravention
ASIC has commenced legal proceedings in the Federal Court of Australia against MG Responsible Entity Limited (MGRE), as trustee and responsible entity for the MG Unit Trust (ASX code: MGC), for failing to disclose to the Australian Securities Exchange (ASX) market sensitive information in a timely manner.
On 29 February 2016, MGRE released announcements to the ASX forecasting:
- an Available Weighted Average Southern Milk Region Farmgate Milk Price (FMP) for the financial year ending 30 June 2016 of $5.60 per kgms and
- a full year net profit after tax (NPAT) for the financial year ending 30 June 2016 of approximately $63 million (the February Announcements).
ASIC alleges that MGRE, in contravention of section 674(2) of the Corporations Act 2001 (Cth), from 22 March 2016 until 8:48am on 27 April 2016, failed to notify the ASX that circumstances had arisen a consequence of which was that Murray Goulburn Co-operative Co. Limited (MG) was unlikely to achieve its forecast as stated in the February Announcements.
MGRE has admitted to the alleged contravention.
The Court will hear joint submissions from ASIC and MGRE as to the appropriate penalty amount. The final penalty amount will be determined by the Court.
Commissioner Cathie Armour said, 'Listed entities must inform the market immediately when they become aware of circumstances that mean there will be material differences in market expectations of its earnings.'
Companies are subject to the continuous disclosure obligations in section 674 of the Corporations Act 2001 (Cth). This imposes a statutory obligation on companies to comply with Listing Rules of the ASX.
ASX Listing Rule 3.1 provides that once a listed entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information.
Companies which fail to make timely disclosure to the market face penalties of up to $1 million per contravention.
MG Unit Trust was officially admitted to the official list of the ASX on 3 July 2015.
MG Unit Trust is a special purpose funding vehicle that was established by MG. The MG Unit Trust issues Units to external investors. MGRE is a wholly-owned subsidiary of MG and the responsible entity of the MG Unit Trust.
Editor's note 1:
The title of this media release has been updated to reflect the correct name of the defendant.
The matter has been listed for hearing on 6 December 2017.
Editor's note 2:
On 6 December 2017, ASIC and MGRE's joint submission was heard by the Hon. Justice Davies of the Federal Court in Victoria. The decision was reserved.
Editor's note 3:
On 15 December 2017, the Hon. Justice Davies of the Federal Court in Victoria handed down her decision on penalty (refer: 17-441MR).