Following the recent first successful shareholder class action by an applicant in Brambles (see Southernwood v Brambles Ltd (No 3) [2026] FCA 418), the Court in ASIC v Nuix Limited & Ors [2026] FCA 490 has put the Brambles judgment into context in finding that:

• Nuix did not mislead the market nor was it in breach of its continuous disclosure obligations; and

• consequently, none of the directors were in breach of their directorial duties in respect of the same alleged conduct.

The Nuix decision is significant for a number of reasons. It reaffirms the importance of robust budget and forecast processes, provides a commercial approach to the application of ASX Guidance Note 8 and the 5% materiality threshold, endorses the Listing Rule 3.1A exception for genuinely preliminary and internal management confidential information and accepts the evidence of well-qualified company witnesses, even in preference to the views of independent experts.

The Nuix judgment provides significant distinction to, and is directly at odds with, key aspects of Murphy J’s reasoning in Brambles, particularly as to materiality (see our recent article: Southernwood v Brambles: A New Dawn for Australian Shareholder Class Actions?), which we expect will be a central focus of any appeal in Brambles and possibly Nuix.

Nuix is a software company that was a subject of a heavily publicised IPO undertaken pursuant to a prospectus dated 18 November 2020, and which listed on the ASX on 1 December 2020 at an offer price of $5.31. The prospectus forecast was that:

• Annualised Contract Value (ACV) of $199.6 million as at 1 June 2021, being the normalised annual value of customer contracts;

• revenue of $193 million for FY21.

Nuix’s shares rocketed to a high of $11.16 in January 2021 but fell when Nuix published its 1H FY21 results on 26 February 2021, at which time it reaffirmed its prospectus forecasts, which it also reaffirmed on 8 March 2021. The share price fell even further when the revenue was downgraded on 21 April 2021.

ASIC did not make any allegations in respect of the prospectus but alleged that Nuix misled the market and was in breach of its continuous disclosure obligations in the period from 18 January to 21 April 2021, in respect of:

• Nuix’s non disclosure of its ACV as at 1H FY2021, which was $17.1 million (approximately 9.6%) less than Nuix expected in order to achieve the prospectus ACV forecast;

• the reaffirmation of the prospectus forecast on 26 February and 8 March 2021; and

• the alleged delay in publishing the 21 April 2021 revenue forecast.

Goodman J found that ASIC had failed to establish that the provision of the half year ACV was relevant to investors (as the prospectus forecast only provided a FY21 number). Further, ASIC had failed to establish that the process undertaken was otherwise than a genuine assessment of the likely ACV at the end of FY21, and indeed the evidence suggested that a genuine assessment was made. Further, while the ACV half year number fell below expectations, there was a reasonable belief that the FY21 number could be obtained.

Accordingly, there was a reasonable basis for the forecasts provided and, to the extent that there was any deviation with prior forecasts, then those deviations fell below the 5% threshold of materiality and did not therefore need to be disclosed. Further, the Listing Rule 3.1A exception clearly applied to the information prior to the disclosures being made.

As Goodman J held that Nuix had not misled the market and was not in breach of its continuous disclosure obligations, likewise the case against the directors must also fail.

In finding against ASIC on all counts, Goodman J made the following important determinations:

• Forecasts (in this case revenue or the ACV figure) are merely an expression of opinion or judgment of a particular matter at a future date. A later prepared estimate cannot be said to be inconsistent merely because it produced a different number, as otherwise there would be “the absurd situation” of having to disclose a tiny variance in respect of a very large number (being $193 million). Importantly, the difference must be material.

• As to what information is material, Guidance Note 8 is a critical factor, such that a variance of less than 5% was not material and need not be disclosed. [This is completely at odds with the judgment of Murphy J in Brambles.] ASIC sought to argue that a variance of less than 5% could still be material, which Goodman J held was “contrary to commercial reality”.

• Nuix’s evidence (both documentary and witnesses) was sufficient to establish a reasonable basis for the forecasts made. While it was held that there is no one way to prepare a forecast and minds may legitimately differ as to the appropriateness of the forecast, the genuineness of the assessment, which is a question of substance rather than form, is a critical criteria (as followed Bonham as Trustee for the Aucham Super Fund v Iluka Resources Ltd [2022] FCA 71; 404 ALR 15 (Iluka)).

• As in Iluka, evidence of a robust top down, bottom up forecast process which was reasonably applied was sufficient to establish a reasonable basis for the forecast.

• Further, while the experts differed as to the appropriateness of the process undertaken, it was notable that:

  • assumptions and inputs in the model involved making judgment calls, on which minds may reasonably differ;

  • the differences provided by ASIC’s expert were “not so stark as to render Nuix’s process unreasonable”;

  • the process undertaken was performed as part of the everyday work of Nuix employees on a subject which they were very familiar. No suggestion was made that any of them were otherwise than qualified, informed, experienced and competent; and

  • ASIC’s expert “appropriately acknowledged [that she] lacked the requisite detailed inside knowledge”, such that Goodman J was satisfied that Nuix’s adopted processes were reasonable and were implemented by employees who were qualified, informed, experienced and competent, which weighs heavily against any conclusion that the forecast lacked reasonable grounds.

• Listing Rule 3.1(A) was applicable, which provides an exception to the requirement that relevant information has to be immediately disclosed if that information is confidential and falls within any of five stipulated criteria, relevantly including being ‘supposition or insufficiently definite to warrant disclosure’ or ‘is generated for the internal management purposes of the entity’. Much of the documentation sought to be relied on by ASIC was headed “DRAFT – FOR DISCUSSION” and contained preliminary numbers for continued review and determination of the forecasts. This was held to be incomplete and generated for further discussion by internal management which, together with Nuix’s cogent witness evidence on the ongoing thorough and comprehensive review process, meant that it fell within the Listing Rule 3.1(A) exception and did not need to be disclosed.

• The value of a rigorous budget and forecast process - The importance of a rigorous and complete ‘top down’ and ‘bottom up’ budget process has again been shown to assist a company’s defence (as it did in Iluka). That must be based on substance rather than form, and there should be evidence of close detailed scrutiny, as there was in Nuix.

• Genuineness is a critical test - There is an appreciation that forecasts are not an exact science and that reasonable minds may differ, however it is the genuineness of the process which is critical.

• Label working documents appropriately - Forecast reviews should be clearly labelled ‘Draft’ for ongoing discussion purposes, so as to fall within the Listing Rule 3.1(A) exception, such that the content will not need to be disclosed until a formal position is timeously adopted.

• The 5% materiality threshold and conflict with Brambles - Companies are entitled to rely on Guidance Note 8 for materiality of information and anything less than 5% is likely to be immaterial, unless there are exceptional circumstances. This is directly contrary to the core basis of Murphy J’s judgment in Brambles, in which he held that Guidance Note 8 was no more than a rule of thumb and merely a guide, such that information reflecting a 1.2% variance was still material. We consider that Goodman J’s reasoning provides the “commercial reality” and “certainty” which companies require in assessing their continuous disclosure obligations and we expect that this issue will be a key focus of any appeal in Brambles and also potentially in Nuix.

• Witness evidence can be the difference - While Murphy J discounted all the evidence of Brambles’ lay witnesses as self serving, Goodman J held that Nuix’s witnesses were qualified, informed, experienced and competent, such that he was prepared to accept their views, which was based on contemporaneous and on the ground experience, even in place of the parties’ experts.

• Address differing views or problem documents at the time - Notably, there were not the nature and extent of incriminating documents in Nuix that there were in Brambles. In Brambles, there were numerous contemporaneous emails questioning the basis and or validity of the forecasts which witnesses sought to back track from, contextualise and explain in court documents years later. There were few, if any, such documents in Nuix, with the documentation showing a comprehensive and continued review and assessment of the forecasts on a near monthly basis. To the extent that there are divergences of views on important matters (such as budgets or forecasts), then these should be appropriately explained and addressed at the time, as it will be difficult to do so in court affidavits years later.

• Implications for the Nuix shareholder class action - The trial of the shareholder class action begins on 27 July 2026 and will seek to differentiate its allegations from the Nuix judgment. Part of that differentiation is a focus on the reasonableness of the Prospectus representations, however that has been made more difficult by the court finding that those same representations were not misleading in February or March 2021.

To discuss the implications of Nuix for continuous disclosure risk, D&O exposure or shareholder class actions, please contact our Insurance team.