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 Treasury’s Consultation Paper on proposed reforms to the regulation of proxy advice; IOSCO’s review of ASIC (and other international trading venue and market intermediaries’) business continuity plans; the ACNC Commissioner’s statement regarding fair and open fundraising in Australia; and consultation on insolvency reforms.


Treasury announces proposed reforms to regulation of proxy advisors. Directors of listed companies will be aware of the increasing influence of proxy advisers over the voting intentions of institutional shareholders, leading to increased calls for regulation.  The Treasury has now published a Consultation Paper in relation to proposed reforms in this area (following similar reforms in the UK and US). The key theme of these reforms are greater transparency of proxy advice. Options being considered to address this (and outlined in the Consultation Paper) are new licensing requirements for proxy advisors, new requirements for proxy advisors to provide their research, voting recommendations and reports to the relevant company to review before circulating to investors and taking steps to separate and requirements for superannuation funds to provide information about their voting policies and voting decisions. Consultation on the proposed reforms is open until 1 June 2021.

IOSCO guidance on business continuity plans for trading venues and market intermediaries. The International Organization of Securities Commissions (IOSCO) previously recommended that trading venues and market intermediaries establish, maintain and implement a business continuity plan.  The rise of new technologies in securities markets over the past year prompted a review by IOSCO of compliance with this recommendation.  The review noted that ASIC was compliant with this recommendation, but there was room for improvement in relation to its requirement for market intermediaries to create and maintain a written business continuity plan identifying procedures relating to an emergency or significant business disruption (and update that plan in the event of any material change to operations, structure, business or location). Notwithstanding the room for improvement, ASIC’s compliance with the broader recommendations places Australia in the leading countries in this respect. The importance of the business continuity plan and support of the market was also emphasised by ASIC in its Report for the first quarter of 2021.  See the IOSCO’s media release.

Fair and open fundraising respects Australia’s generosity. Directors of not-for-profit entities should not last week’s statement by the ACNC Commissioner Hon Dr Gary Johnsoutlining the intense public scrutiny directed towards the way charities raise funds, and the importance of  charities being fair and open about their fundraising policies and practices. The statement notes that while the ACNC does not regulate fundraising, the way charities conduct fundraising are a crucial aspect of good governance and practices must comply with the Governance Standards. Further, the statement provides that appeals and fundraising campaigns must be conducted in ways that maintain and enhance public confidence. The statement also emphasises the importance of relevant state or territory fundraising laws being complied with and charities having policies and procedures to address a range of pertinent matters. See the ACNC Commissioner’s full media release.


Government to consult on further insolvency reforms. As part of Australia’s economic recovery plan, the Morrison Government is pursuing further measures to improve Australia’s insolvency framework for both small and large businesses. In the 2020–21 Budget, the Government announced the most significant reform to Australia’s insolvency framework in 30 years. These reforms, which came into effect on 1 January 2021, created a new simplified restructuring and liquidation process for small companies and has given directors the control and flexibility they need to either restructure or wind down operations. The Government remains committed to further simplifying and streamlining insolvency law so that viable businesses that do encounter economic challenges have the opportunity to restructure and go on trading. To this end, the Government announced last week that it will: consult on how trusts, which are commonly used by small businesses, are treated under insolvency law; review whether the insolvent trading safe-harbour provisions, which were introduced in 2017 and designed to promote a culture of entrepreneurship and innovation by providing breathing space for distressed businesses, remain fit for purpose; and consult on improving schemes of arrangement processes to better support businesses, including by introducing a moratorium on creditor enforcement while schemes are being negotiated. See Treasury’s consultation page.


Budget.  At the time of writing, Commonwealth Treasurer Hon Josh Frydenberg will be putting the finishing touches on the Commonwealth Government’s budget for the 2022 financial year.  Most of the substantive initiatives have been broadly flagged, with an emphasis on repairing the economic fallout from the COVID-19 pandemic.  Of particular interest to directors will be further details of a planned $10bn infrastructure spending programme and support for the ailing aged care sector.  The tourism, travel and education sectors will also be looking for clues as to the potential timing for a reopening of international borders: which now appears unlikely until next year at the earliest.

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