COVID-19 and listed companies

COVID-19 continues to create unprecedented circumstances for businesses, and listed companies face their own particular challenges arising out of this rapidly evolving situation.

Several listed companies have removed their guidance and earnings’ outlook from the market and are explaining their inability to provide further information at this stage to investors given the rapidly evolving circumstances.

Many Boards are focusing on their business continuity plans and emergency response to unexpected events, including the health and safety of their employees and customers, shortage of supply and/or demand and the need to revise their strategy to minimise risks and harness opportunities.

Continuous disclosure

Listed issuers are required to release to the market promptly and without delay any material information they have. This includes information their directors or senior managers have, or ought reasonably to have, come into possession of in the performance of their duties, unless one of the exceptions within the NZX Listing Rules applies. This constructive knowledge test requires Boards to constantly reassess the effect of COVID-19 on their particular business, rather than generally in the market (“particular information”).

While the impact of COVID-19 may be hard to measure as the situation is developing at pace, our advice to business leaders is to:

  • review your financial position, including past, current and expected, and consider whether statements need to be corrected, clarified or supplemented

There is a focus on issuers that have provided future performance guidance to the market. These issuers should be disclosing promptly and without delay if their expectations have changed.

There is no need to “replace” guidance. An issuer can remove their guidance from the market if providing an updated forecast is too uncertain that it becomes a matter of supposition or insufficiently definite. However, issuers must remember their obligation to adjust their financials for events occurring after their balance date – if there has been a significant change in circumstances between the balance date and reporting date.

  • provide a fair and balanced approach to disclosure

While providing fulsome explanations in continuous disclosure announcements can be helpful, especially from an investor relations perspective, overly pessimistic releases providing for a worst case scenario will not “shield” directors from liability and may require additional disclosure as further information becomes available. Directors’ judgement and experience to assess the circumstances and expected effect in the business becomes critical.

  • constantly monitor market expectations and reactions

If a false market arises with the shares of an issuer, this has to be corrected. It may be that the expectations of the market as to the effect of COVID-19 in a certain business are misinformed. In this situation, the issuer has an obligation to correct the misapprehension with any additional information/analysis they may have, or with a better explanation of why their assessment of known facts is different to that of the market (or a portion of it).

Practical matters

For many issuers, some practical matters are coming to play too.

Shareholders’ meetings 

Issuers may need to consider their ability to postpone physical meetings within statutory requirements – and availing themselves of technology to hold virtual meetings and remote voting could be a sensible decision. Of course, there is cost and time involved for these measures to be implemented, but considering the early stage of the global pandemic, we encourage companies to consider their options now.

Shareholding/equity events

As part of any issuer’s contingency plan, companies should be considering the protocols affecting their “business as usual” or day-to-day activities, as well as the protocols that apply to more sporadic but significant corporate events.

Capital raisings, takeovers and other transactions may become real possibilities in the current volatile market. Boards should consider receiving advice on how to prepare or approach these types of significant events if they are relevant to their businesses, to maximise value and avoid further unexpected events.


Frequent and prompt communication with financiers is also essential in turbulent times. Issuers want to avoid triggering material adverse events and/or other breaches of covenants or representations as a result of general market conditions. Advice may be required to assess the best way to deal with these possible issues, but a proactive approach is sensible.


In summary, we expect listed companies to be investing significant time considering the effects of COVID-19 on their compliance obligations.

Continuous disclosure is just one area. Other practical considerations for shareholder gatherings and shareholder/equity events should be on the agenda.

Boards are urged to keep in constant communication to apply a balanced and informed view of the circumstances. In these uncertain times, we expect that financial and strategic reviews will become necessary.

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