It has been observed that Bellamy`s Australia Ltd has faced some serious financial crisis due to some reasons. The reasons are specific and they are quite major. It was however reported that the company was facing a halt in the shares that they had as Certification and Accreditation Administration of the People`s Republic of China (CNCA) that suspended the license of the company that is required for the export of the milk formula from the plant of Melbourne. The halt in the share trading has affected the in the financial position of the company. Apart from this it has been observed that the company has faced another major issue in the current times. It was witnessed that Bellamy`s Australia Ltd has requested the Australian Stock Exchange (ASX) for the suspension of their shares. This decision had a havoc effect on the company and especially on the shareholders. The decision had a negative effect on the company. The major reason of this decision is the non-compliance with the principles of continuous disclosure. The Bellamy`s Australia Ltd came up with the view that the decision of suspension would enable to get enough time to manage their obligation for the continuous disclosure. These two important reasons are causing a financial quandary for the company.
The annual report of the company proved that the company has neglected about the option of goodwill in their financial statements for the year 2016. They made assets acquisition of 719,000 dollars in Australia, 8000 in East Asia and 25,000 combined in China (annualreports.com 2018). This proved the fact that the company had some major acquisitions of segment assets in the year 2016. Therefore it has been observed that there has been a slight increase in the cash position in the year 2016 as compared to the year 2015 (annualreports.com 2018).
The statement of profit and loss of Bellamy`s Australia Ltd shows the decreased level of profit for the company in the year 2017 as compared to the year 2016. In the year 2017, it was observed that the company faced a decrease in the gross profit as compared to the year 2016. In the year 2016 the company faced the profit of 101,228,000 dollars and in the year 2017 the company suffered the loss as it had the profit of 91,521,000 dollars. This was not the end things grew worse when the company witnessed a net loss of 809,000 dollars in the year 2017. On the other hand the net profit of the company in the year 2016 was 38,328,000 dollars. The years 2016 and 2017 saw an increase in the administrative and other costs. Later the CNCA suspended the milk-exporting license on Bellamy`s Australia Ltd from the Melbourne plant (investors.bellamysorganic.com.au 2018).
The above explanation justifies the fact that the financial position of Bellamy`s Australia Ltd has become shoddier in the year 2017. The negative effect was because of the halt that the company had to experience in the trade and also the suspension of the shares. The above mentioned aspects are the only thing responsible for the major loss of the company in the year 2017. The company is going through such loss that it is recommended for the clients to sell the shares of Bellamy`s Australia Ltd.
Executive summary
The development of the continuous disclosure framework is inversely related to the development of efficient equity market in Australia. This is the main objective of the development of the continuous disclosure framework. The major reason for this is the particular framework that helps the companies of the Australia in the revealing of the fragile and confidential information that are having a material effect on the share prices. The primary of this report is to analyze and evaluate the various aspects of the continuous disclosure framework of ASX for the Australian companies. It is evident from many resources that the Australian companies can have the opportunity to have the benefit from the implementation of the continuous framework of ASX. The most important aspect of this is that the framework plays an integral part in revealing the information about the shares of the company to the shareholders and the investors in order to reach to some kind of decision.
The process of continuous disclosure regime or the requirement of the Australian Security Exchange (ASX) has gained much importance for the Australian companies. Based on the mentioned requirement it has been observed that the Australian companies have some amount of obligation that is related to the disclosure of the information related to the share under the Lasting Rules 3.1 and 3.1A. The requirement of continuous disclosure must be followed and while following such it should be the responsibility of the business organizations to inform about the specific changes to ASX that might have any sort of material effect on the share prices of the companies (Hsu, Lindsay and Tutticci 2012). The justification given by the ASX regarding the necessity of the disclosure obligation was to increase the integrity and the efficiency of the share market. Apart from all these there are many questions that have come to the forefront regarding the importance and the effectiveness of the continuous disclosure framework of ASX for the Australian companies. The importance of the continuous disclosure framework has to be analysed in order to understand the necessity of the framework. There are some valid reasons of the importance of the framework. The report analyses the importance of the same and the effect of the framework on the Australian companies. The report mostly focuses on the benefits of the Australian companies that the companies can avail by complying with the principles of the continuous disclosure framework. The necessities and the importance of the framework are discussed in the report.
The above discussion states that the Australian companies can avail the benefits by complying with the obligation of the continuous disclosure requirement.
Provides proper information to market:
The business organizations were able to release ample information to the investors by following the continuous disclosure framework. The release of information to the investors is important as the investors invest their money on the companies in the shares. Providing information before hand would make it easy for them to take decision while investing their money. This would help the investors to make a proper judgment about the share prices (Matolcsy, Tyler and Wells 2012). This is a matter of fact that the companies must provide genuine information that would help the investors to invest their money in the correct place. Any kind of wrong information might mislead the investors and they might fall in the wrong trap. The other benefit of having the disclosure framework is it makes the companies answer to the rumours that are there in the market and the speculations that are having a chance of having a material impact on the share prices of the companies (Hermalin and Weisbach 2012).
The most important impact is the continuous disclosure framework on the Australian companies is the release of the information on time to the investors and the shareholders (Chapple and Truong 2015). The company should take the responsibility of conveying all the information to the investors in the market in right time. It is recommended that as soon as the company comes to know about the information that can be sensitive and that can have a material effect on the share price they should share this before making any further delay. The company can however follow the rule where the disclosure can be withheld. Following the same principles it is required by the company to disclose the information on time when it is no longer legitimately withheld. It is also required by the companies to answer all the rumours that are there in the market related to the price of the shares (Seamer 2014).
The framework provides assistance to all the investors to become equally beneficial from equal access to the share that are related to all kinds of information of the Australian companies (Russell 2015). It is one of the major principles of the framework to provide equal opportunity to all the investors so that all the investors can get equal advantages as well as equal disadvantages. This saves the integrity of the share market. In the absence of selective disclosure, ASX has become able to reduce the chances of insider trading related with the materially sensitive share information (Di Lernia 2014). This particular aspect helps in the restoration of the confidence of the shareholders and the investors in ASX.
The biggest advantage of having continuous disclosure framework is the prevention of the premature release of the information that is related to the shares (Chang, Hooi and Wee 2014). This framework helps to keep a control between the premature disclosure of information and the material and valid information related to the shares. This step can avoid the creation of false market. The absence of the continuous disclosure framework can have adverse effect on the companies. The companies would try to make false and conflicting information about the shares and the securities. The framework would prevent this step and it would help the companies to have a good and genuine market (Chapple, Jubb and Lee 2012).
The implementation of the continuous disclosure framework helps to safeguard the commercial interests of different parties who are involved in the transactions of the share markets. This framework helped to keep the balance between the timely disclosure of sensitive material information and safeguarding the commercial interest of the shareholders and investors (North 2014). This is the reason the Australian companies must maintain the confidentiality of share information. This is the reason the Australian company must abide by the principles of the continuous disclosure framework (Tran 2015).
According to the framework the companies must maintain the confidentiality of the information and prevent it from leaking in the market. The business organizations have the authority to spread sensitive information to their advisors and the commercial partners. The partners are not having the authority to trade in the shares and the securities of the company based on the information, it is because they are not available to the investors. This particular point implies that it is completely the responsibility of the company to confidentiality of the released information to the investors and the shareholders (Di Lernia 2014).
The continuous disclosure framework helps the Australian companies in establishing the remedies that are related to the confidential material information for the shares. This particular framework helps the companies in the establishment of a transparent guidance for the confidential and sensitive information (Price 2014). To be more specific the framework sets some amount of penalty for different kinds of situations that is related with the disclosure of sharing the information by the Australian companies in revealing the material and confidential information related to share.
From the above discussion it can be extracted that the continuous disclosure framework is essential and necessary for many Australian companies. The implementation the framework helps all the business organizations in releasing ample amount of information for the investors and the shareholders so that they can make effective decision of investment (Riaz et al. 2013). Thus this can be learned from the above analysis that the framework plays an essential role in the reduction of information asymmetry between the Australian companies and the investors (Di Lernia 2014).
Conclusion
The above discussion concludes the fact that the continuous disclosure framework has many positive roles to play in the Australian firms. This is of great help to the investors and avoids the negative aspects that are in many cases related to the share market. The trade is a risky process and it is dependent on utmost trust and a transparent process of doing the trade. The above discussion shows the way in which the framework prevents the companies to disclose wrong information. This would show the investors the right path to invest their money and to get good results from it. The maintaining of the confidentiality is another major aspect that has been covered under this framework. Thus from the discussion and the analysis of the entire report it can be concluded and it can be extracted that the implementation of this framework is positive and it is a desired process. It is helpful for the development for the robust and effective equity market in Australia. It is because of all this reason that it can be stated that the Australian companies must follow a continuous disclosure framework in order to do good business.
References
Annualreports.com. (2018). Annual Report 2015-16. [online] Available at: https://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BAL_2016.pdf [Accessed 16 Jan. 2018].
Chang, M., Hooi, L. and Wee, M., 2014. How does investor relations disclosure affect analysts’ forecasts?. Accounting & Finance, 54(2), pp.365-391.
Chapple, E.L., Jubb, C. and Lee, J., 2012. Audit committee effectiveness in a mandatory disclosure environment. In Proceedings of the 2012 Accounting and Finance Association of Australia and New Zealand Conference. Accounting and Finance Association of Australia and New Zealand (AFAANZ).
Chapple, L. and Truong, T.P., 2015. Continuous disclosure compliance: does corporate governance matter?. Accounting & Finance, 55(4), pp.965-988.
Di Lernia, C., 2014. Empirical Research in Continuous Disclosure. Australian Accounting Review, 24(4), pp.402-405.
Di Lernia, C.A., 2014. Faith/less? Market integrity and the enforcement of Australia’s continuous disclosure provisions.
Hermalin, B.E. and Weisbach, M.S., 2012. Information disclosure and corporate governance. The Journal of Finance, 67(1), pp.195-233.
Hsu, G.C.M., Lindsay, S. and Tutticci, I., 2012. Inter?temporal changes in analysts’ forecast properties under the Australian continuous disclosure regime. Accounting & Finance, 52(4), pp.1101-1123.
Investors.bellamysorganic.com.au. (2018). Annual Report 2017. [online] Available at: https://investors.bellamysorganic.com.au/FormBuilder/_Resource/_module/hwGxZyb3NkyBtC5tw1kqzQ/docs/reports/Bellamys_Annual_Report_2017.pdf [Accessed 16 Jan. 2018].
Matolcsy, Z., Tyler, J. and Wells, P., 2012. Is continuous disclosure associated with board independence?. Australian Journal of Management, 37(1), pp.99-124.
North, G., 2014. Listed Company Disclosure and Financial Market Transparency: Is this a Battle Worth Fighting or Merely Policy and Regulatory Mantra?. Browser Download This Paper.
Price, J., 2014. Continuous disclosure. Governance Directions, 66(1), p.6.
Riaz, Z., Ray, S., Ray, P.K. and Kirkbride, J., 2013. Collibration as an alternative regulatory approach for remuneration governance: A contextual analysis of Australia. International Journal of Disclosure and Governance, 10(3), pp.246-260.
Russell, M., 2015. Continuous disclosure and information asymmetry. Accounting Research Journal, 28(2), pp.195-224.
Seamer, M., 2014. Does Effective Corporate Governance Facilitate Continuous Market Disclosure?. Australian Accounting Review, 24(2), pp.111-126.
Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in Australia?. Browser Download This Paper.
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