Underwriting Shortfalls must be Disclosed

Nearly a decade has passed since ANZ placed circa $750 million in shares to the underwriters of its $2.5 billion equity capital raising leading to a dispute with ASIC over ANZ's failure to disclose the shortfall. The Federal Court has now upheld the primary judgement that ANZ should have disclosed their shortfall under its continuous disclosure obligations under the Corporations Act 2001 (Cth).¹

Speaking on the primary decision from last October, ASIC provided a media release noting that the decision reaffirms ASIC's "long-standing expectation that an issuer of securities must disclose material shortfalls in capital raisings to the market."²

The Federal Court has solidified ASIC's position. The court found that shortfalls must be disclosed as they are expected to materially affect the price or value of company shares. Since this is important information for a hypothetical investor, it must be publicly disclosed.³