Welcome to Edition 58 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.
KEY BOARDROOM BRIEF
Spike in appetite for corporate divestments helps drive uptick in M&A activity. According to EY’s latest Global Corporate Divestment Study - produced in association with Mergermarket and the result of surveying over 900 corporate executives worldwide - M&A deals in Q1 2018 surpassed $1 trillion. In particular, strategic divestments have shot up the corporate priority list; with a 50% increase in the number of divestments planned from last year. This uptick is marked by Westfarmers’ recent announcement to spin-off Coles, which led to a 5% hike in share price. Other key findings of the survey were: (i) 74% of divestments were directly influenced by the evolving technological landscape; (ii) 50% of respondents are more likely to divest when funds for new technology are needed; (iii) 56% of respondents admitted they held on to assets longer than necessary; (iv) macroeconomic and geopolitical triggers drive 47% of divestment decisions; and (v) 80% considered tax policy changes as one of the most significant geopolitical shifts impacting a company’s divestment plans.
ASIC consults on fees-for-service regime commencing in July 2018. The Government has released draft legislation and explanatory materials ahead of ASIC’s fees-for-service regime commencing on 1 July 2018. The fees-for-service regime forms part of the ASIC Industry Funding Model and facilitates ASIC’s recovery of regulatory costs that are directly attributable to a particular entity. Actual fee amounts will be finalised once ASIC has consulted on its fees-for-service Cost Recovery Implementation Statement. Submissions on the proposals can be made until 1 May 2018. See last Wednesday’s media release by Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer, for more detail.
New AUSTRAC laws regulate cryptocurrency providers for the first time. AUSTRAC, Australia’s financial intelligence agency and anti-money laundering and counter-terrorism financing (AML/CTF) regulator, implemented new laws on 11 April 2018 (effective immediately) for digital currency exchange (DCE) providers operating in Australia. They are intended to strengthen AUSTRAC’s compliance and intelligence capabilities and help DCEs implement systems and controls that can minimise the risk of criminals using them for money laundering, terrorism financing and cybercrime. DCEs operating in Australia must now register with AUSTRAC and comply with the AML/CTF compliance and reporting obligations. A transition period for registration with AUSTRAC applies until 14 May 2018. See AUSTRAC’s media release and DCE page on AUSTRAC’s website for more information.
Canadian Securities Regulators release report on climate change-related disclosures. On 5 April 2018, the Canadian Securities Administrators (CSA) released CSA Staff Notice 51-354 – Report on Climate change-related Disclosure Project, which sets out the findings of its review of current disclosure by public companies of risks and financial impacts associated with climate change. The CSA have indicated that new disclosure requirements may follow, including disclosure of the company’s governance process for identifying and assessing material climate change risks as well as the Board’s role in that process. Directors should note the increasing focus on the issue of climate risk disclosure by market regulators globally and consider what steps might be required to review risk management frameworks and disclosure policies against best practice. This continues to be one area in which the corporate sector appears to be leading the legislature – effectively looking through the policy gridlock in Canberra to develop its own approach.
THE WEEK AHEAD
Junior explorers can lodge JMEI applications for 2018 from tomorrow. The application window for junior explorers to apply for certain tax concessions in respect of greenfield exploration expenditure incurred in the year ending 30 June 2018 under the Junior Minerals Exploration Initiative (JMEI) opens tomorrow and closes on 16 May 2018. Junior explorers considering a capital raise in the 2019 year should have their applications (and associated supporting working papers) ready ahead of the 1 June 2018 opening date for applications.
Government’s consultation on ADIs for the purposes of the BEAR Bill closes this Friday. As reported in previous editions of Boardroom Brief, the Government’s consultation on how the size of authorised deposit-taking institutions (ADIs) will be determined for the purposes of the BEAR Bill closes on 20 April 2018. The proposal is that: (i) a small ADI will have less than or equal to $10 billion on a three year average of total resident assets; (ii) a medium ADI will have between $10 billion and $100 billion on a three year average of total resident assets; and (iii) a large ADI will be any ADI with greater than or equal to $100 billion on a three year average of total resident assets. See the Treasury’s exposure draft and accompanying explanatory material of the new legislation for more detail on these proposals. The BEAR Bill (imposing higher standards of behaviour in the banking sector) commences on 1 July this year for large ADIs and on 1 July 2019 for small and medium ADIs.