13/07/2020

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 ASX’s extension of temporary emergency capital raising relief, ASIC’s focus areas for 30 June 2020 financial reports, board and executive remuneration survey results, ESG guidance for boards and the Government’s first annual modern slavery report.

YOUR KEY BOARDROOM BRIEF

ASX extends temporary emergency capital raising relief.  ASX’s emergency capital raising relief (by way of class waivers) to help listed entities affected by the COVID-19 pandemic to raise urgently needed capital now applies until 30 November 2020.  See ASX’s media release.  While providing listed companies with valuable flexibility in uncertain times, the move will not be uncontroversial, with some commentators pointing to the potential for greater dilution to retail shareholders, who were the main buyers of equities in the March quarter, right as institutional investors were moving to cash. 

ASIC releases focus areas for 30 June 2020 financial reports.  As we enter the 2020 financial reporting season, Directors should take heed of ASIC further guidance on its focus areas for financial reporting in the COVID-19 environment.  This supplements ASIC’s previously published frequently asked questions.  Given the adverse impacts on many entities from the COVID-19 pandemic, directors, accounts preparers and auditors should focus on asset values, provisions, solvency and going concern assessments, events occurring after year end and before completing the financial report, and disclosures in the financial report and Operating and Financial Review.  ASIC intends to review the full-year financial reports of about 200 larger listed entities and other public interest entities, with a focus on entities and industries adversely affected by the current conditions as well as the adequacy of disclosure by entities whose businesses have been positively affected.

Board and executive remuneration report.  On 3 July 2020, Aon and the Governance Institute of Australia released the results of their latest Board and executive remuneration survey which provide a snapshot of remuneration levels for directors and senior executives from 433 organisations.  Among the results were: (i) almost two thirds of ASX300 organisations did not increase board fees in FY 2018-19; (ii) where there was an increase to board fees, the median increase for both chair and ordinary members was 4%; and (iii) for senior executives within the ASX300, median salary movement was 2.4%.  See the Governance Institute’s media release and click here to download a copy of the report.

World Economic Forum releases ESG guidance for boards.  The World Economic Forum’s White Paper is intended to assist boards to integrate environmental, social, governance and data stewardship (ESG&D) considerations into the company’s strategy and corporate governance framework.  It provides a six-point agenda for boards in all industries, jurisdictions and entity types covering: (i) long-term strategy; (ii) engaging with ESG&D in risk management; (iii) resilience against crises and systemic shocks; (iv) cooperation and engagement with collective efforts towards the public good; (v) integrating reporting of financial and ESG&D risks and opportunities; and (vi) adapting board membership, objectives (such as those expressed in board and committee charters) and functionality to be more diverse and engaged with ESG&D issues.  See also the WEF’s media release.

Government releases first annual report on modern slavery.  The Federal Government’s Annual Modern Slavery Report, released on 18 June 2020, provides an overview of the status of implementation of the modern slavery legislative requirements.  Among the key priorities for 2020 are: (i) developing the first Commonwealth Modern Slavery Statement (due by 31 December 2020); (ii) establishing the Modern Slavery Expert Advisory Group to advise the government; (iii) launching the online modern slavery register to make modern slavery statements publicly accessible and searchable; (iv) promoting best practice, including establishing the Modern Slavery Recognition Scheme to formally recognise excellence in combatting modern slavery; and (v) monitoring compliance trends as reporting entities submit their first modern slavery statements.  Click here for more information on the modern slavery rules, reporting deadlines and access to related resources.

THE WEEK AHEAD

ASIC’s new Regulatory Portal.  From 27 July 2020, relief applications and various fundraising and corporate finance documents must be lodged with ASIC via the new ASIC Regulatory Portal.  Anyone needing to use the Portal will need to register their own account on the registration page.  The Portal will track the status of items and record correspondence with ASIC. See ASIC’s media release for more information on the Portal’s functions.

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Our COVID-19 hub collates important articles and legal advice on various aspects of COVID-19 on how it may impact your business.