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 impacts of coronavirus on Australian business, the important ASIC v King decision, ASIC’s fee consents and independence disclosure consultation and Treasury’s endorsement of recent ACNC recommendations.


Coronavirus update. With the World Health Organisation declaring a pandemic, global policy efforts to contain the spread of the coronavirus have ramped up, as has the economic policy response. Whether the $17 billion stimulus package announced by the Federal Government will be sufficient to avert a recession remains to be seen. In the meantime, corporate Australia is likely to embark on a large-scale experiment in remote working, with Telstra directing 20,000 employees to work from home this week (Gilbert + Tobin has also implemented a work from home policy from today). Australia’s much-vaunted NBN will be put to the test as workers log on to their virtual workplaces. Priority concerns for Directors are likely to include (in decreasing order of priority): (1) ensuring the health and wellbeing of employees – this may include enforcement of work from home protocols and other remote work arrangements; (2) scenario planning for immediate cash flow / solvency issues, which is likely to lead to a flurry of capital raisings, assuming the market remains open and receptive; (3) cost reduction initiatives, which may include overhead reduction measures (eg discretionary travel and hiring freezes, workforce optimisation, reduction of opening hours etc); and (4) looking to future, and thinking about strategies to recover quickly from the crisis. Directors of listed companies should also consider potential continuous disclosure issues - see G+T’s article “COVID-19 and your continuous disclosure obligations” for a discussion of this issue.

ASIC v King clarity on the definition of ‘officer’. In the much-anticipated decision of ASIC v King [2020] HCA 4, relating to the $2.5 billion collapse of Gold Coast property and finance group MFS in 2008, group CEO Michael King, who was not a director of the relevant subsidiary that had contravened the Corporations Act, was held liable for associated contraventions because he had sufficient capacity to affect significantly the financial standing of the subsidiary. In a judgment well-received by ASIC (see ASIC’s media release), the High Court unanimously determined that there is no requirement a person be a named officer of a corporation to fall within the ambit of paragraph 9(b)(ii) of the Corporations Act. The relevant test will be a matter of fact and circumstance to determine whether a person has the requisite capacity to significantly affect the financial standing of the company. For corporate groups, emphasis will be placed on the overall position of influence the person had within that group’s affairs, rather than a strict reading of the ‘office’ held by the person. The fact that Mr King acted as the overall boss of the MFS Group and assumed overall responsibility for the subsidiary was sufficient to establish that he had the capacity to affect significantly the subsidiary’s financial standing. Mr King had a $300,000 penalty imposed and was liable for 60% of ASIC's trial costs. The ruling is set to have significant repercussions for companies and their senior management staff; ASIC Commissioner John Price stating it sends "a clear signal to anyone running a company – in name or in effect – that they should be responsible and held accountable for their actions". Click here for a summary of the decision and here for the full judgement.  

ASIC consults on proposals about advice fee consents and independence disclosure. ASIC’s Consultation Paper 329 Implementing the Royal Commission recommendations: Advice fee consents and independence disclosure (CP 329) is intended to address the consumer harm identified by the Financial Services Royal Commission Final Report resulting from fees for no service, superannuation balance erosion through inappropriate advice fees and poor advice from financial advisers whose duty to their client conflicts with their own interests.The proposals include: (i) draft legislative instruments that deal with advice fee consents and independence disclosure; and (ii) further guidance in Regulatory Guide 245 Fee Disclosure Statements to help industry meet obligations around ongoing fee arrangements, including renewal notices and fee disclosure statements. In particular, ASIC wishes to require: (i) written consent to deduct, or to arrange to deduct, fees from a client account as part of an ongoing fee arrangement (Recommendation 2.1); (ii) written consent to deduct fees from a superannuation account under an arrangement that is not an ongoing fee arrangement (Recommendation 3.3); and (iii) a written statement that discloses advice providers' lack of independence (Recommendation 2.2).  Submissions can be made until 7 April 2020. 

Treasury releases response to the ACNC’s 2018 review. The Government’s response has supported the following recommendations arising from the 2018 legislative review by the Australian Charities and Not-for-profits Commission (ACNC): (i) supporting the ACNC as an effective regulator by enabling swifter decision making through expanded delegation powers, enhancing also its powers to detect breaches of governance standards and address misconduct; (ii) reducing red tape through reporting threshold adjustments, streamlining and simplifying regulatory requirements and improving data sharing between Commonwealth agencies;  (iii) mandating the disclosure of related party transactions and for large charities, aggregated remuneration paid to responsible persons; and (iv) sharing information on ACNC investigations, when in the public interest and disqualifying responsible persons who have certain criminal convictions.


Dividend / distribution announcements. Declared dividends or distributions for the period ending 31 March 2020 to be announced using the ASX Online form by Wednesday 25 March 2020.

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