The ASX Close Review Procedure: A Public Statement About Your Disclosure Governance

Since 26 June 2025, ASX has operated a formal Close Review Procedure - a significant escalation in how it enforces continuous disclosure obligations against listed entities.

Before this change, ASX's primary enforcement sequence ran from price query, to aware letter, to suspension, to delisting. There was no formal intermediate step. Close review fills that gap, and it matters more than most small-cap boards currently appreciate.

What Close Review Actually Is

An entity subject to close review must have every ASX announcement reviewed and cleared by ASX Compliance before it is released to the market. That applies to all announcements except periodic reports, for a period of six months. The placement on close review is announced publicly under the entity's ASX code. Your market, your investors, and your institutional shareholders can all see it.

Entities that fail to demonstrate improvement within 12 months face a formal show cause process and potential delisting.

What Triggers It

ASX activates close review for entities that repeatedly fall short of disclosure standards. That includes:

- Inadequate or inaccurate responses to price queries and aware letters

- Patterns of late disclosure — announcing material information after trading activity has already reflected it

- Earnings surprises where ASX cannot reconcile the price movement with the timing of disclosure

The July 2025 Compliance Update flagged heightened attention to ASX200 entities whose share price moves 10% or more on results day. The principle — that a material share price movement on new information is itself evidence of delayed disclosure — applies across the entire market.

Why This Matters for Small-Cap Entities Specifically

Large-cap entities have in-house legal teams and disclosure committees. Most small-to-mid cap entities do not. The board meets quarterly. The company secretary handles lodgements. The external lawyer is engaged on transactions. Nobody has continuous ownership of disclosure governance between capital raises.

That gap is exactly what close review is designed to address — by imposing real, ongoing scrutiny on the entity's communications until ASX is satisfied the gap is closed. The operational burden of pre-clearance for every announcement, combined with the reputational signal to your register, is significant.

The Practical Response

For boards of small-to-mid cap entities, the close review procedure signals that disclosure governance needs to be treated as an ongoing function, not an event-driven one. That means:

- Clear ownership of the continuous disclosure obligation sitting with a named person who has actual legal knowledge of Listing Rule 3.1

- A documented process for assessing materiality before ASX asks

- Responses to price queries and aware letters drafted as market disclosures, not administrative letters

If your current structure leaves a gap between the person who knows the law and the person who manages the ASX filings, close review is the foreseeable consequence.

Related reading: Responding to ASX Query and Aware Letters

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Julian Rockett is the Principal of JR3 Legal, an ASX specialist corporate law firm and company secretarial practice based in Sydney. He acts as external general counsel and company secretary for ASX-listed entities, primarily in the resources, energy, and technology sectors. Feel free to contact Julian, julian@jr3legal.com

www.jr3legal.com | julian@jr3legal.com