Four common mistakes in ASX announcements
The ASX listing rules provide guidelines for companies when producing announcements to be loaded on to the ASX platform. Some of the guidelines are prescriptive while others are quite vague and subject to interpretation.
Unfortunately, this means the quality and level of information in ASX announcements varies greatly from company to company – not exactly helpful for investors comparing a portfolio of stocks.
Companies release announcements in order to communicate with investors in a way that also complies with their continuous disclosure obligations (Guidance Note 8, Listing Rule 3.1). They need to include enough information in a statement to enable a reasonable person to rely on it to make an investment decision. This often means that announcements are longer than they need to be, include irrelevant information and are drafted without the audience in mind.
As practitioners who draft, review and read hundreds of ASX announcements each year, we have compiled a list of the four most common mistakes.
- Is it a targeted statement or a rambling essay? Many ASX announcements are too long and fail to clearly deliver the key messages at the beginning of the statement. As a general rule, if key messages are not on the front page of an announcement they will probably be missed by the majority of readers.
- What is the announcement about? Readers should be able to gain a complete and clear understanding of the detail and the context of the announcement and why it is important to your business. They shouldn’t have to go to a website or search through earlier announcements to understand what this announcement means. It is an easy trap to assume knowledge on the part of the reader so when drafting an announcement remember not everybody knows your company, project or business as well as you do.
- Is it engaging? If you have spent time and energy drafting an important announcement, you want to ensure it is engaging for readers. The announcement should be written in short paragraphs using active language and include maps, graphs and images wherever possible.
- Is the announcement actually material or newsworthy? Beware of message fatigue. Regularly releasing non-material information to the market in a bid to attract investor and media attention can result in your audience switching off and missing or skipping over an important announcement when it goes out.
If these questions are kept in mind when drafting an announcement, you are much more likely to end up with a final product which will be read and valued by investors and the media alike.