Welcome to Edition 79 of Boardroom Brief.
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.
YOUR KEY BOARDROOM BRIEF
ASX releases Activity Report for August 2018. On 5 September 2018, ASX released its Group Monthly Activity Report for August 2018 – total capital raised during the month was $2.5 billion, down 57% on the previous corresponding period (pcp). The average number of daily trades was 18% higher than the pcp and the average daily value traded on-market was $4.7 billion, 12% higher than the pcp. Average daily options volume was up 58% on the pcp, while the value of securities held in CHESS was 17% higher.
G+T releases Shareholder Activism Report 2018. Against the backdrop of record levels of shareholder activism in Australia, G+T has released a report looking at the growth in both investment and ideological activism over the last 12 months, identifying emerging trends and examining the current regulatory landscape. You can access G+T’s “Shareholder Activism Report 2018” here.
The Mining Rehabilitation Fund comes back into the spotlight. Directors of mining companies will be well aware of the recent flurry of government activity and press coverage both in WA and in other states that have brought mine rehabilitation issues back into focus. Although initially the introduction of a requirement for mining tenement holders to pay a levy was heralded as a significant innovation to deal with issues of historical abandoned mine sites, government reviews regarding mining rehabilitation remain ongoing. Directors should note that the latest indications point to forthcoming increases to the MRF levy in WA, greater use of unconditional performance bonds or imposition of other financial assurance mechanisms, and a possible expansion of monitoring and compliance measures. Boards should consider their environmental rehabilitation liabilities generally, and, specifically, their current and potential future MRF liability in their strategic planning. See G+T Insight article, Mining Rehabilitation in Western Australia – Where to From Here? for more information.
ASIC releases its Corporate Plan for 2018-22. On 7 September 2018, ASIC released its primary planning document for identifying its focus areas over the short and medium term and explaining its strategy, regulatory approach and performance evaluation framework. This year’s Corporate Plan lists six focus areas for 2018-19 being: (i) potential harms from emerging products (eg, ICOs and crypto currencies) and firms’ cyber resilience; (ii) poor culture and firms’ use of consumer data; (iii) quality of financial reporting, disclosure of incentives and phoenixing; (iv) practices targeting financially vulnerable consumers; (v) inadequate and misleading retail product disclosures; and (vi) monitoring international regulatory developments for inconsistency with domestic rules. ASIC’s priorities over the next four years are to accelerate and expand its enforcement activities (through greater use of external expertise and resources) and supervisory work and to promote technology-based regulatory solutions. Directors should note the clear tilt towards a more interventionist approach by ASIC.
30% target for female ASX 200 board representation on track. According to the Australian Institute of Company Directors (AICD), as at the end of August 2018, women accounted for 28.5% of ASX 200 board positions (with women having accounted for 50% of such board appointments this year). Despite the AICD expressing concerns only a couple of months ago that the 30% target might not be met, the AICD now considers it achievable. The push for greater gender diversity on boards reflects the growing consensus that a diverse board delivers better outcomes for shareholders. See AICD’s media release.
ASX publishes response to consultation feedback on CHESS replacement system. On 4 September 2018, ASX confirmed the final functional scope and implementation roadmap for the CHESS replacement system. You can access the Report here.
THE WEEK AHEAD
Energy policy. Directors of energy-exposed companies craving certainty over the direction of national policy in this field are likely to be further disappointed this week with the dropping of the former Turnbull Government’s signature policy, the National Energy Guarantee (NEG). Business leaders are urging the Morrison Government to ensure that the reliability component of the NEG remains in place as part of any future policy. This remains to be seen, however one thing is clear from the financial press: anti-big-business rhetoric is increasing, which (much like the lead-in to the Hayne Royal Commission) may well portend a more populist tilt in energy policy in the weeks and months ahead.
Statutory half yearly (December year-end) financial reports (except mining exploration entities) due this Thursday. Under the ASX’s new “get tough” approach, failure to lodge periodic reports n time will result in an automatic suspension of the entity’s securities.
AGM season. For companies with a 30 June year end, AGMs will need to be held by 30 November. Companies are reminded that draft Notices of Meeting must be submitted to ASX for review and new voting exclusions apply (such that excluded persons are only precluded from voting in favour of a resolution).