YOUR KEY BOARDROOM BRIEF
ASIC consults on new product intervention power. As part of its response to the Financial System Inquiry (FSI), in April 2019 the Australian Government introduced a product intervention power that enables ASIC to make a product intervention order when a financial product or a credit product has resulted, will result or is likely to result in significant consumer detriment. ASIC’s draft guidance on the use of this power covers among other things: (i) the meaning of significant consumer detriment; (ii) the types of interventions ASIC can make; (iii) limitations of the power; (iv) when a product intervention order will commence; and (v) the consequences of breaching an intervention order. Submissions can be made until 7 August 2019. See ASIC’s media release and consultation.
Federal Court imposes personal liability on 3 directors. The Federal Court has imposed personal liability on three directors under s 180 of the Corporations Act over the collapse of ASX-listed education and training provider Vocation. The court found that the company and its directors misled investors because they failed to disclose to the market the fact the company was facing funding and enrolment suspensions for two of its biggest training colleges. Directors are reminded of ASIC’s increased focus on a company’s market disclosures and a growing trend for ASIC to use s 180 in a ‘stepping stone manner’ to seek orders against directors personally even where there are not otherwise direct liability provisions for directors in the Corporations Act. You can read the case here.
Update on key legal changes taking effect today. The new financial year sees the following key legislative and regulatory changes:
- New whistleblower laws. Directors should ensure their companies have thoroughly workshopped how they will ensure compliance. A policy requirement applies from 1 January 2020 to public and large proprietary companies — however, given the wide applicability of the new rules and potential sanctions for non-compliance, Directors of all companies subject to them should see a whistleblower policy and training to officers and employees as a tool for mitigating risk. Only last week a court ruled that a CEO whistleblower was aware of the protections under the Corporations Act and had not suffered detrimental conduct at the hands of the company and managing director – while based on the “old regime”, the case shows a robust policy is important. We predict an uptick in whistleblower cases given a far more expansive regime now applies. Click here for ASIC’s revised information sheets on the new regime.
- Financial reporting thresholds increased — A company is now a ‘large proprietary company’ if it meets two of the following:
- $50 million or more in consolidated revenue;
- $25 million or more in consolidated gross assets; or
- 100 or more employees.
- PRRT regime changes — Of interest to Directors of oil and gas companies, lower uplift rates now apply (namely, to limit the scope for excessive compounding of deductions) and onshore projects have been removed from the Petroleum Resource Rent Tax (PPRT) regime. These measures are expected to raise $6 billion for the Commonwealth by 2028-29. The Government will consult on other changes intended to improve PRRT efficiency and administration later this year.
- Government procurement contracts — Businesses tendering for Commonwealth Government procurement contracts over $4 million (inclusive of GST) must now provide a statement from the ATO to show they have a satisfactory tax record. The new procurement-connected policy is designed to increase the integrity of supply chains and government procurement processes and forms part of the Government’s focus generally to tackle black economy practices and support businesses that ‘are doing the right thing’.
THE WEEK AHEAD
Rates. The RBA meets again tomorrow, and markets are factoring in the likelihood of a further 25 bps cut in the cash rate to a record low of 1%. From there the trajectory appears less clear and is likely to depend on key economic parameters, most notably wage inflation, over the first half of the new financial year.
New UK PM to be confirmed this month. The leadership race between Boris Johnson and Jeremy Hunt is in full swing, with Mr Johnson still the bookies favourite. Despite a chaotic start and criticism of Mr Johnson’s invisibility, a flurry of interviews during which he made clear his plan for the UK to leave the EU on 31 October 2019, “do or die” has gone down well with Tory party members. The topic will no doubt re-emerge as the contest continues. The new Prime Minister will be announced on 23 July.