CONTINUOUS DISCLOSURE POLICY
This document sets out the policies and procedures that AirXpanders, Inc. (AirXpanders) will comply with in relation to continuous disclosure.
The objectives of this policy are to:
- establish procedures for the reporting of price sensitive information to the Chief Executive Officer and the Australian Company Secretary for review;
- establish procedures for the preparation, approval and release of announcements to the ASX; and
- establish procedures to enable compliance by AirXpanders with its continuous disclosure obligations under the Corporations Act and ASX Listing Rules.
This policy applies to:
- all directors of the Board of Directors of AirXpanders (Board); and
- all officers, employees, contractors and consultants of the AirXpanders group.
3 Continuous disclosure obligation
3.1 Disclosure obligation
(a) Legal obligation of disclosure
AirXpanders has continuous disclosure obligations under the Corporations Act and ASX Listing Rules to keep the market fully informed of any price sensitive information relating to AirXpanders. ASX Listing Rule 3.1 requires that AirXpanders immediately notify the ASX of any information of which AirXpanders becomes aware, concerning AirXpanders, that a reasonable person would expect to have a material effect on the price or value of any securities issued by AirXpanders(including CHESS Depositary Interests (CDIs) over securities issued by AirXpanders) (Material Information).
(b) Material effect on the price of securities
A reasonable person is taken to expect information to have a material effect on the price or value of securities if it would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the securities.In forming a view as to whether a reasonable person would consider information to be material, previous disclosure to the market should be considered, for example, previously released profit expectations, commentary on likely results, or detailed business plans or strategies. A list of matters that may be considered material is set out in Annexure A. This list is merely
indicative and should not be seen as an exhaustive list of the matters that should be considered for disclosure.
(c) Information in AirXpanders’ knowledge
AirXpanders becomes aware of information if any of its officers has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of AirXpanders.
An officer includes a director or secretary of AirXpanders and a person who makes, or participates in making, decisions that affect the whole or a substantial part of the business of AirXpanders.
(d) Release of information to others
Material Information must not be released to any person (e.g. brokers, analysts, the media, professional bodies or any other person) until AirXpanders has given the information to the ASX and has received an acknowledgement that the ASX has released the information to the market
3.2 Requirement to disclose information ‘immediately’
Under ASX Listing Rule 3.1, Material Information must be disclosed to the ASX immediately upon AirXpanders becoming aware of the information, unless it falls within the exception to disclosure under ASX Listing Rule 3.1A (see section 3.3 below).ASX considers the word “immediately” should not be read as meaning “instantaneously”, but rather as meaning “promptly and without delay”.Factors that the ASX will take into account in assessing whether AirXpanders has complied with its obligations to disclose information promptly and without delay include:
- where and when the information originated;
- the forewarning (if any) AirXpanders had of the information;
- the amount and complexity of the information concerned;
- the need in some cases to verify the accuracy or bona fides of the information;
- the need for an announcement to be carefully drawn so that it is accurate, complete and not misleading;
- the need in some cases for an announcement to comply with specific legal o r ASX Listing Rule requirements; and
- the need in some cases for an announcement to be approved by the Board.
3.3 Exceptions to disclosure
ASX Listing Rule 3.1A provides that Material Information will not need to be provided to the ASX in certain circumstances. The application of ASX Listing Rule 3.1A will be determined on a case-by-case basis.
Material Information will not need to be provided to the ASX if all of the following exceptions apply in respect of the Material Information:
- one or more of the following five situations applies:
- it would be a breach of the law to disclose the Material Information;
- the Material Information concerns an incomplete proposal or negotiation;
- the Material Information comprises matters of supposition or is insufficiently definite to warrant disclosure;
- the Material Information is generated for the internal management purposes of AirXpanders; or
- the Material Information is a trade secret; and
- the information is confidential and ASX has not formed the view that the information has ceased to be confidential; and
- a reasonable person would not expect the information to be disclosed.
3.4 Procedure for disclosure
The following procedures apply to the preparation, approval and release of continuous disclosure announcements to the ASX:
- Executives and senior management must notify the Chief Executive Officer and Chief Financial Officer as soon as they become aware of information that may be Material Information (see below).
- Chief Financial Officer will:
- review the Material Information reported by executives and senior management with the Chief Executive Officer (or in his absence, the Chairman);
- determine, in consultation with the Chief Executive Officer (or in his absence,the Chairman), whether any of the Material Information is required to be disclosed to the ASX;
- if disclosure is required, request the Australian Company Secretary to prepare the form of announcement to the ASX, for approval by the Chief Financial Officer and, if the Chief Financial Officer considers it necessary, the Board;
- once approved, authorize the Australian Company Secretary to lodge the announcement with the ASX; and
- post the announcement on AirXpanders’ website after receiving confirmation from the ASX that it has been released to the market.
- (c) When assessing whether to approve a draft announcement, the Chief Executive Officer, Chief Financial Officer or the Board must ensure that the announcement is factual, complete, balanced and expressed in a clear and objective manner that allows investors to assess the impact of the information when making investment decisions. In this context, “balanced” means disclosing both positive and negative information.
3.5 Obligations of executives and senior managers
As soon as an executive or senior manager becomes aware of information that may be Material Information, the executive or senior manager must provide to the Chief Executive Officer and the Chief Financial Officer the following information:
- a general description of the matter;
- details of the parties involved;
- the relevant date of the event or transaction;
- the status of the matter (e.g. final/negotiations still in progress/preliminary negotiations only);
- the estimated value of the transaction (if applicable);
- the estimated effect on AirXpanders’ finances or operations; and
- the names of any in-house or external advisers involved in the matter.Any change in the information must be immediately notified to the Chief Executive Officer and the Australian Company Secretary.The determination of whether certain information is Material Information necessarily involves the use of judgement. Any information that may have a material effect on the price of AirXpanders’ securities should be treated as if it is Material Information and the Chief Executive Officer and the Australian Company Secretary should be notified following the process outlined above.
3.6 Analyst/media communications
Information provided to, and discussions with, analysts are also subject to the continuous disclosure policy.
Only the Chairman and Chief Executive Officer are authorised to issue statements or make comments to the media or to speak on behalf of AirXpanders to analysts or journalists. Other executives or members of senior management may speak on behalf of AirXpanders subject to prior approval from the Chairman or Chief Executive Officer. The Chief Financial Officer is authorised to speak to analysts and proxy advisers about matters specific to the financial reports of AirXpanders.Material Information must not be selectively disclosed (i.e. to analysts, the media or members of the medical community) before being announced to the ASX. All information that is proposed to be presented to analysts, journalists or members of the medical community that may include Material Information should be provided to the Chief Executive Officer and the Chief Financial Officer before presenting that information externally. All inquiries from analysts must be referred to the Chief Executive Officer or the Chief Financial Officer (in the case of financial reports). All material to be presented at an analyst briefing must be approved by or referred through the Chief Executive Officer (or his or her delegate) before the briefing.
All inquiries from the media must be referred to the Chief Executive Officer. All media releases must be approved by or referred through the Chief Executive Officer (or his or her delegate) before release to journalists.
3.7 Interview/briefing black-out period
During the period from the end of the financial year or half -year and the release to the ASX of the financial results of AirXpanders for the relevant period, no employee of AirXpanders maydiscuss financial performance or forecasts with any analyst, investor or the media, unless the information has already been disclosed to the ASX.Any person who is given permission by the Chief Executive Officer to give a media interview, speak with analysts, or make a presentation must notify the Australian Company Secretary of thedate and time for the interview and must give a copy of any presentation to the Australian Company Secretary, before the interview/presentation.
Additional periods in which interviews may not be given or in which presentations may not be made without the specific permission of the Chief Executive Officer may be imposed. Relevant persons will be notified of any such additional interview/briefing black-out period.
3.8 Market rumours and correcting a false market
Under ASX Listing Rule 3.1B, if the ASX considers that there is, or is likely to be, a false market in AirXpanders’ securities, and requests information from AirXpanders to correct or prevent the false market AirXpanders must immediately give that information to the ASX.This obligation to give information applies even where an exception described above in section 3.3 applies. Unless disclosure is required to correct or prevent a false market, AirXpanders has a general “no comment” policy in relation to market speculation and rumours.
3.9 Trading halts and suspensions
In order to facilitate an orderly and informed market, it may be necessary to request a trading halt or voluntary suspension of trading in AirXpanders’ securities from the ASX, for example:
- to manage unexplained material price and/or volume change;
- if confidential information about AirXpanders is inadvertently disclosed;
- prior to a press conference or briefing being held in advance of a formal announcement; or
- to prevent an uninformed market pending the announcement of price sensitive information.
The Chief Executive Officer is authorised to request a trading halt or voluntary suspension. In the absence of the Chief Executive Officer, any two directors are together authorised to make a decision to request a trading halt or voluntary suspension. In these circumstances the Chief Executive Officer will first consult with the Chairman (or in his absence, the Lead Independent Director, failing whom, another director) regarding the decision to request a trading halt or a voluntary suspension. No other employees are authorised to request a trading halt or suspension on behalf of AirXpanders.
4 Relationship between continuous disclosure and other disclosure obligations
In addition to complying with its continuous disclosure obligations, AirXpanders is required to disclose other types of information under the ASX Listing Rules and applicable securities laws. For example, AirXpanders must prepare and issue quarterly ASX releases and periodic financial reports and accounts. AirXpanders acknowledges that compliance with its obligations to prepare such documents does not affect its continuous disclosure obligations under ASX Listing Rules3.1 and 3.1B.
5 Communication with stockholders
AirXpanders acknowledges that effective communication with CDI holders and stockholders assists the creation and maintenance of an informed market in AirXpanders’ securities and enhances corporate governance by encouraging a culture of transparency in relation to AirXpanders’ activities. AirXpanders seeks to:
- provide a comprehensive and up-to-date website, which includes copies of all Material Information lodged with the ASX (including announcements and financial information) as well as relevant and non-confidential policies and charters and other company information;
- place all relevant announcements, briefings and speeches made to the market or the media on the website; and
- place full text of annual reports, notices of meetings of stockholders and accompanying explanatory notes on the website. Stockholder meetings are an opportunity for CDI holders and stockholders and other stakeholders to hear from and put questions to the Board, management and the external auditor. Stockholders and CDI holders may attend the meeting in person or by proxy, representative or attorney. If stockholders or CDI holders are present at stockholder meetings, the Chairman will provide reasonable time following the consideration of reports for questions and comment on these matters.
6 Management of the policy
AirXpanders has nominated the Australian Company Secretary as the person with primary responsibility for all communication with the ASX. The Australian Company Secretary is responsible for:
- liaising with the ASX in relation to continuous disclosure issues;
- ensuring that the system for the disclosure of all Material Information to the ASX in a timely fashion is operating;
- co-ordinating the actual form of disclosure, including reviewing proposed announcements by AirXpanders to the ASX and liaising with the Chief Executive Officer or Chairman in relation to the form of any ASX releases;
- liaising with the Board (where necessary) in relation to the disclosure of information;
- keeping a record of all ASX and other releases that have been made;
- periodically reviewing AirXpanders’ disclosure procedures in light of changes to th ASX Listing Rules or applicable securities laws and recommending to the Board any necessary changes to the procedures; and
- preparing regular disclosure reports to the Board, which advise of:
- material matters considered and the form of disclosure (if any); and
- any material changes to AirXpanders’ continuous disclosure processes.
7 Contraventions and penalties
AirXpanders takes continuous disclosure very seriously. AirXpanders contravenes its continuous disclosure obligations if it fails to notify the ASX of the information required by the ASX Listing Rules.
7.2 Penalties for breach
If AirXpanders contravenes its continuous disclosure obligations under the ASX Listing Rules, the ASX may suspend trading in AirXpanders’ securities or may de-list AirXpanders from the ASX.
If AirXpanders contravenes its continuous disclosure obligations, it may also be liable under the Corporations Act and may face:
- criminal liability, which attracts substantial monetary fines; and
- civil liability for any loss or damage suffered by any person as a result of AirXpanders’failure to disclose relevant information to the ASX. However, if the court finds that AirXpanders has acted honestly and reasonably, the court may, in its discretion, excuse AirXpanders from civil liability.
7.3 Persons involved in the contravention
AirXpanders’ directors, officers, employees, contractors, consultants or advisers who are involved in the contravention by AirXpanders of its continuous disclosure obligations may also face criminal penalties and civil liability. Substantial pecuniary penalties, imprisonment, or both, may apply.
7.4 “Due diligence” defence
A person will not be considered to be involved in the contravention if the person proves that they:
- took all reasonable steps to ensure that AirXpanders complied with its continuous disclosure obligations; and
- after doing so, believed on reasonable grounds that AirXpanders did comply with its continuous disclosure obligations.
7.5 ASIC infringement notices
As an alternative to seeking the imposition of a civil penalty, ASIC may issue AirXpanders with an infringement notice for an alleged contravention of the continuous disclosure obligations. An infringement notice may be issued if ASIC has reasonable grounds to believe ( even if it cannot prove) that AirXpanders has contravened its continuous disclosure obligations and ASIC has followed specified procedures.
The risk of AirXpanders being issued with an infringement notice despite ASIC not being able to prove that AirXpanders has contravened its continuous disclosure obligations underscores the importance of AirXpanders and its personnel complying with this policy.
8 Further information
Any person who has questions about this policy, or who requires further information, should contact the Chief Executive Officer or the Chief Financial Officer.
9 Review of this policy
This policy may be amended by resolution of the Board of Directors.Approved by the Board of Directors of AirXpanders, Inc.
Annexure A – Material Information
Material Information may include:
- the financial condition, results of operations, AirXpanders-issued forecasts and the earning performance of AirXpanders or an affiliate, which are significantly different from that anticipated by AirXpanders or the market;
- a proposed acquisition or disposition of material assets to be announced by AirXpanders, an affiliate or joint venture partner;
- material developments in regulatory approval processes, including in relation to device reimbursement;
- material developments in relation to the intellectual property of AirXpanders and its affiliates;
- a transaction for which the consideration payable or receivable is a significant proportion of the written down value of AirXpanders’ consolidated assets. Normally, an amount of 5% or more would be significant, but a smaller amount may be significant in a particular case;
- events or occurrences that have an impact on the operations of AirXpanders or an affiliate;
- natural disasters or accidents that have particular relevance to the businesses of AirXpanders or its suppliers;
- significant changes in technology or the application of technology which could affect business ;
- a proposed announcement to alter pricing or tariff policies other than in the ordinary course of
- resolving to pay a dividend, or a recommendation that no dividend be paid;
- legal proceedings against or allegation of any breach of the law, whe ther civil or criminal, by AirXpanders or any of its employees (other than debt recovery proceedings or insured workers’ compensation claims);
- any notification by a ratings agency that it will review the credit rating of AirXpanders;
- a change in AirXpanders’ financial forecast or expectation;
- the appointment of a receiver, manager, liquidator or administrator in respect of any loan, trade credit, trade debt, borrowing or securities held by AirXpanders or any affiliate;
- changes in AirXpanders’ senior management or auditors;
- entry by AirXpanders or an affiliate into a new line of business or the discontinuance of a particular line of business; and
- planning to undertake a significant financing or security issue (whether debt or equity) or to take other action with respect to outstanding securities (e.g. stock repurchase program, redemption of bonds) or any default on any securities.