Glossary term
Continuous Disclosure
Subject: Compliance and Regulation, Market Conduct and Securities
Also known as: Timely Disclosure, Ongoing Disclosure
Continuous disclosure is the duty of a listed company to tell the market promptly about information that could affect its share price, and to publish regular reports, so that all investors are equally informed.
Explanation
Listing rules and securities law usually split the duty into two parts. Event-driven disclosure requires an immediate announcement of price-sensitive news such as a profit warning, acquisition, major contract loss or change of control. Periodic disclosure requires scheduled filings such as annual and half-year reports. Companies need an internal process: a disclosure committee, a test for what counts as material, controls to keep information confidential until release and rules on who may speak to analysts. Some regimes allow a short delay if release would harm the company and confidentiality is held. Australia uses the name continuous disclosure; the EU's Market Abuse Regulation, the US Form 8-K and India's SEBI listing regulations set similar duties. Shareholders who sold before a late bad-news announcement can sue, which is why legal teams record when management first knew.
Example
A listed mining company's main mine floods, halting output for two months. The CFO tells the disclosure committee the same afternoon, which agrees the news is material. The company asks the exchange to pause trading in its shares for a few hours, then publishes an announcement before the market reopens, explaining the likely impact. The insider list was updated the same day, so staff who knew were told not to trade.
Not to be confused with
- Regulatory Reporting
- Regulatory reporting sends data to a regulator; continuous disclosure informs the whole market publicly and at the same time.