10/08/2020

This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less. 
In this Edition, we consider the recent decision of the Takeovers Panel in the Virgin matter, recent FIRB reforms, the launch of the modern slavery statement website and ASX’s latest compliance update.

YOUR KEY BOARDROOM BRIEF

Virgin Panel application withdrawn. Following a Federal Court decision last week, which essentially upheld the validity of confidentiality orders by the Court relating to the deal documentation for Bain’s proposed recapitalisation of Virgin, a group of Virgin bondholders sought and received the Takeovers Panel’s consent to withdraw their application challenging the Bain deal.  While not surprising of itself, the Panel made some observations regarding its general willingness to intervene in cases involving insolvent companies.  In Virgin Australia Holdings Limited (Administrators Appointed) 02 [2020] ATP 12, the Panel noted that, while there is nothing in the Corporations Act that prohibits the Panel from conducting proceedings on an application in relation to the affairs of a company in administration, “proceedings will generally be unlikely to be conducted where a company is in administration, and no equity value remains in its shares”.  In that case, there was no evidence before the Panel that would cast doubt on the administrators’ certification that they expected no recovery for shareholders.  As the economic impacts of COVID-19 ripple through the economy, we expect more examples of creditors seeking control of insolvent companies through the mechanism of deeds of company arrangement and s436A of the Corporations Act.  The Virgin decision suggests that the Panel may be trying to pre-empt the potentially significant flow of applications in such situations.

FIRB reforms. As noted in last week’s edition of Boardroom Brief, draft legislation implementing key changes to Australia’s foreign investment framework has been released for comment. Some changes include introducing a ‘notifiable national security action’ for acquiring a ‘direct interest’ in a national security business, acquiring an interest in certain kinds of land and starting a national security business, and giving the Treasurer new ‘call in’ powers which provide the unilateral reviewing abilities and new ‘last resort’ power. See G+T’s publication, Exposure draft legislation for changes to Australia’s foreign investment framework released for more information on the proposals.  The consultation closes on 31 August 2020.

Launch of modern slavery statements and new COVID-19 guidance.  The Federal Government has launched its Online Register for Modern Slavery Statements. The website, administered by the Australian Border Force (ABF), will act as a central website for all modern slavery statements provided by entities reporting under the Modern Slavery Act 2018 (Cth) (Modern Slavery Act).  Additionally, the ABF has developed guidance for entities impacted by the COVID-19 pandemic about how to report under the Modern Slavery Act and key actions entities can take to reduce the risk of vulnerable workers in their operations and supply chains becoming exposed to modern slavery as a result of COVID 19.

ASX releases compliance update for August 2020.  ASX’s latest Compliance Update clarifies how listed entities can get the benefit of the extension to the lodgement date for their audited/reviewed accounts under Listing Rules 4.2B and 4.5.1 under the ASX class waiver. The entity must provide to the market unaudited/unreviewed accounts announcing also its reliance on the relief and subsequently any material differences with its audited/reviewed accounts.  The Update also discusses the requirement for entities to notify ASX and the market immediately if they decide to cancel a dividend or distribution, noting several entities have deferred or cancelled previously announced dividends and distributions to preserve cash to cope with the COVID-19 pandemic (in some cases where the entity’s securities have been trading ex-dividend/distribution).  Directors of entities considering deferring or cancelling previously announced distributions or dividends should be mindful that the classification of a dividend/distribution paid on securities can have significant implications for products such as options, warrants, hybrid securities and indices that reference those securities (especially where a classification change from an ordinary to special dividend/distribution is involved).  You can access Compliance Update No. 08/20 here.

THE WEEK AHEAD

Annual ASX listing fees.  The first instalment of ASX annual listing fees for FY2021 was due on 31 July 2020.  If payment is not received by 5:00pm (AEST) on Friday 21 August 2020, ASX will suspend trading in the entity’s securities before trading commences on Monday 24 August 2020.  If trading remains outstanding at 5:00pm (AEST) on Friday 28 August, ASX will remove the entity from the official list from close of trading on Monday 31 August 2020.  The second instalment of annual listing fees invoice will be issued in early January 2021 for payment by the end of January 2021.

Dividend / distribution announcements.  Declared dividends or distributions for the period ending 30 September 2020 to be announced using the ASX Online form by 24 September 2020.

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