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A recent tightening of disclosure rules for ASX-listed companies aimed to bolster the credibility of the local bourse after a series of falls from grace — but some say the latest revision has gone too far and is disproportionately stifling tech small caps.

Last month the ASX upgraded disclosure rules after noting “contractual arrangements with customers have fallen short of the required standards” in some cases.

The ASX did not name particular stocks, but the move followed controversies with tech stocks such as GetSwift and Big Un.

The ASX is now requiring greater detail of customer contracts and any conditions that need to be satisfied before a customer contract is legally binding — such as trial periods.

In particular, the ASX is demanding listed companies name customers or suppliers named in announced deals. 

But such a public revelation could spell the end of a deal altogether, says tech analyst Marc Kennis, founder of TMT Analytics.

One tech stock, $25 million Connected IO (ASX:CIO), is entering its fifth week of suspension for not revealing the names of two US customers.

Connected IO announced a deal with a US cyber security company in early March — but under upgraded disclosure rules the company has to wait to trade on the news until the parties are named.

On April 12 Connected IO said it had negotiated to reveal the customers at an IT conference in San Francisco — and “anticipates that it will be in a position to make a full update to the market by no later than 20 April 2018″.

That deadline came and went without any news on Friday.  

“If tech companies reveal the names of new clients, then often there is no client,” Mr Kennis told Stockhead. 

“99.9 per cent of companies making these sorts of deals are bound by confidentiality agreements and disclosing details to the market is very very sensitive.”

Mr Kennis says there’s a fine line between protecting confidentiality and keeping a market fully informed.

He points to the experience of Internet Of Things provider Buddy Platform (ASX:BUD) which in the past month has had the ASX run a fine-tooth comb through reseller deals going back to 2017 – asking for specifics on three occasions.

After Buddy shares resumed trading on April 13, chief David McLauchlan said he was “pleased” to respond to the ASX probe and assured investors that “transparency and meeting our continuous disclosure obligations were of the utmost importance to Buddy”.

But he also pointed out: “we weren’t alone in this situation – quite a number of listed companies have had similar enquiries…”

Junior telco Syntonic (ASX:SYT), for example, was suspended recently for two weeks while the ASX probed whether the entity did enough due diligence a new partner’s ability to meet revenue guarantees.

Equities analyst Stuart Roberts of NDF Research said he’s felt the letter of the law when it comes to modelling projections for company performance – and it all comes down to “reasonable basis”.

“I am worried that you might be forced to not do any valuations at all and stuck with just describing companies,” he told Stockhead.

“Especially for pre-revenue companies, investors want to know what a company could be worth and there is often basis for models to be created from announcements – but ‘reasonable basis’ is often subjective.”

It’s the same rule that got Mr Kennis’s latest report retracted from the bourse.

In a note on G Medical (ASX:GMV) the analyst set out targets for the company’s medical smartphone case and G Medical patch, and prospective financial information based on production and sales targets.

But a day later it was retracted because of it did not have ‘reasonable grounds’ to support the reports statements.

The ASX has been contacted for comment.