Disclosure dilemmas: disclosure issues in the Australian energy and resources sector

Abstract

In light of the continuing buoyancy in commodity and energy prices and the related spike in mergers and acquisitions activity in the energy and resources sector, energy and resources companies’ disclosure obligations are coming under closer scrutiny, both during merger talks and in the ordinary course of business. Company directors and officers need to have a sound understanding of their disclosure responsibilities, so that they can navigate the disclosure minefield with confidence during important periods of growth and consolidation for their company and the sector in general. This paper will highlight key risks and considerations that energy and resources companies should be aware of when considering their disclosure obligations. A better understanding of several specific disclosure situations is provided, including: the enforcement regime that applies to energy and resources companies in relation to disclosure issues (including liability for individual directors and officers); disclosure obligations during merger discussions; appropriate disclosure responses when a bidder comes knocking; difficulties in providing information to prospective bidders; the application of ASX disclosure carve-outs to merger discussions—when they cease to apply; potential insider trading issues in a takeover context; the impact of joint venture arrangements on disclosure obligations; and, specific disclosure obligations for energy and resources companies and proposed changes to oil and gas reporting. Several recent incidents and prosecutions relating to public disclosure issues in the sector are examined to provide a clearer idea of the risks relating to non-disclosure or late disclosure.