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ASIC publishes report on corporate finance regulation for July to December 2018. ASIC’s quarterly report - directed at companies, lawyers, corporate advisers and compliance professionals working in corporate finance - sets out its key observations on fundraising, mergers & acquisitions and corporate governance issues for the period from 1 July to 31 December 2018 as well as its areas of focus for the next six months. Over the next six months, ASIC will focus on: (i) the sufficiency of historical financial disclosure for roll up listings (ie, where issuers acquire or propose to acquire a large number of businesses around the time of an IPO); (ii) on-market buy-backs; (iii) scrip consideration in control transactions; (iv) fairness and equality issues when target holders are offered different consideration in M&A; and (v) governance and conflicts issues in takeover transactions (including the use of ‘fiduciary outs’ to ensure exclusivity and other lock-ups do not unduly restrict a target board from carrying out its fiduciary and statutory duties and full disclosure of target director benefits). For Directors involved in, or contemplating, an IPO, takeover or similar transaction, the Report provides a helpful overview of the typical disclosure concerns ASIC raises and circumstances in which ASIC may intervene. You can read the Report here.
EPA scraps controversial WA carbon-neutral directive amid industry outcry. The WA EPA has scrapped a controversial directive which would have required WA resources projects emitting more than 100,000 tonnes of carbon a year, as a condition of environmental approval, to fully offset those emissions — the only requirement of its kind to apply in the world. See last week’s AFR and Western Australian articles for Gilbert + Tobin partner Michael Blakiston’s views on the critical implications of the since-abandoned directive. While a welcomed outcome, Directors of energy and resources companies should be aware that climate change issues may continue to lurk beneath the surface of environmental assessments at both a State and Federal level, given heightened community and regulatory attention on the issue – not to mentioned activist investors.
New whistleblower regime will commence on 1 July 2019. The Whistleblower Bill — which standardises and bolsters cross-sectoral protections for whistleblowers — has received royal assent. The new regime kicks in on 1 July 2019. Compliance with the new (and onerous) requirements is now a significant boardroom issue for ASX-listed and large proprietary companies. The prescriptive policy and program requirements will represent a significant compliance burden for Directors and management. They demand careful consideration of how to roll-out a compliant whistleblower programme. See G+T’s update for an overview and re-cap of the reforms. Directors of ASX-listed companies should note the 4th edition of the ASX Corporate Governance Council’s Principles and Recommendations released last month also refers to whistleblowing, although these recommendations are not mandatory and only take effect for a company’s full first financial year commencing after January 2020.
Harsher corporate and financial sector penalties now apply. Also last week, in yet another move to strengthen corporate accountability, reforms introducing much harsher civil penalties and criminal sanctions for contraventions of the Corporations Act received royal assent. These new penalties and sanctions apply now.
Brexit meltdown. Last week, a series of votes on Brexit rocked the UK, with the UK Parliament overwhelmingly rejecting the deal on the table (twice) and then voting not to leave the EU without one. While the UK has voted to put the brakes on the “big divorce” for now, all 27 EU members must agree to it — and, according to reports, EU officials are only prepared to do so if Prime Minister Teresa May agrees to hold a second referendum or tone down her withdrawal deal. With no clear route out of the crisis, Directors of entities with UK exposure will need to remain vigilant.
Upcoming reporting deadlines.