12/08/2019

Welcome to Edition 122 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.

In this Edition, we consider the Productivity Commission’s review of resources sector regulation, ASIC’s proposed guidance on whistleblower policies and recent guidance on board minute taking practices.

YOUR KEY BOARDROOM BRIEF

Productivity Commission to review resources sector regulation. The Government’s announcement recognises the vital role of resources exports to the Australian economy (which in the 2018-19 financial year reached an all-time record of $278 billion) and the impact of tougher hurdles on getting new resources projects off the ground (restricting the sector’s future expansion and costing jobs). The 12-month inquiry will focus on assessing current project approval processes at home and abroad (with a view to ensuring the efficiency and transparency of approvals and reducing red tape) and identifying broader impediments to the timing, nature and extent of business investment in the Australian resources sector. Directors should note the review forms part of the Government’s broader efforts to tackle barriers to investment in key industries and boost efficiency, productivity and job creation in Australia.

ASIC consults on new guidance for whistleblower policies. Following the introduction of the new whistleblower laws last month, ASIC has released for consultation proposed guidance on the new obligation for public companies, large proprietary companies and corporate trustees of superannuation entities to implement a whistleblower policy by 1 January 2020. The guidance covers matters that must be addressed by the whistleblower policy as well as best practice guidance on establishing, implementing and maintaining a policy. 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. Submissions can be made until 19 September 2019.

Are your board minutes fit for purpose? Last week, the AICD and the Governance Institute released a joint statement, supported by a barristers’ opinion, outlining their thoughts on board minute taking practices for meeting legal obligations. A webcast recording is available on the AICD’s website.

ASX releases compliance update. ASX’s latest Compliance Update reports an increase in the number of enquiries and announcements by listed entities on engagement in cryptocurrency-related activities and therefore provides a detailed overview of ASX’s concerns on such activities; encouraging listed entities to consult with them first. This update echoes the ongoing scrutiny generally of the ICO and crypto-asset market and follows ASIC’s recent release of updated Information Sheet 225 to help businesses operating in these emerging markets comply with the law. Directors of companies dealing with crypto-currency assets or considering ICOs to raise funds should stay tuned to regulatory developments in this area.

THE WEEK AHEAD

Interest rates and global market volatilityAs predicted, a slightly higher than anticipated (although, overall, still subdued) inflation print saw the RBA hold interest rates steady last Tuesday. Since then, escalation of the US-China trade war wiped more than $80 billion from the Australian sharemarket following China’s decision to let the yuan weaken against the US dollar; fuelling fears of a recession and supporting speculation the RBA will lower its cash rate to a fresh record low in coming months, following the aggressive lead of the NZ Reserve Bank.

Gold. There was plenty of talk at last week’s Diggers and Dealers Conference in Kalgoorlie about the record A$ gold price. However, with the race towards global zero (or negative) interest rates now well and truly on, the focus is likely to turn to the US$ gold price and its potential to beat 2013’s historical high above US$1,700 / oz. 

Public hearings on ASIC’s responsible lending guidance. Public hearings take place today in Sydney and next Monday in Melbourne and will be streamed online. The purpose of the hearings is to test the views of stakeholders and provide greater understanding of business operations.

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