Welcome to Edition 125 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 ASIC’s Corporate Plan for 2019-23, CDR energy datasets, social media policy considerations, climate change and increased SPP participation limit.
YOUR KEY BOARDROOM BRIEF
ASIC releases its Corporate Plan for 2019-23. On 28 August 2019, ASIC released its primary planning document for identifying its focus areas over the short and medium term and explaining its strategy, regulatory approach and performance evaluation framework. This year’s Corporate Plan lists five focus areas for 2019-20 being: (i) poor design and inappropriate sale of investment and protection products; (ii) inappropriate sale of credit products to consumers and limited access for small business; (iii) poor conduct in financial markets driven by lack of competition, structural challenges or conflicts of interest; (iv) poor governance and accountability practices by boards, executives and investors; (v) the lack of deterrent effect on regulated entities by ASIC’s regulatory action. ASIC’s priorities over the next four years are to accelerate and expand its enforcement activities (through greater use of external expertise and resources) and supervisory work and to promote technology-based regulatory solutions. Directors should note ASIC's continued tilt towards a more interventionist approach to regulation and its focus on high-deterrence enforcement action.
Treasury consults on CDR energy datasets. Treasury’s consultation paper seeks views on the datasets that should apply under the consumer data right (CDR) in order to support energy retail product comparison and switching, as well as more advanced use cases such as whether a household would benefit from smart meters, solar, battery storage or switching to more energy efficient appliances. This follows the ACCC’s selection last week of the Australian Energy Market Operator (AEMO) “gateway model” as its preferred data access model. Submissions can be made until 26 September 2019. Directors of consumer data-rich businesses should take note of the potential of CDR legislation to substantially disrupt existing business models.
How robust is your social media policy? A High Court decision earlier this month ruled that the termination of an employee for posting 9,000 anonymous tweets criticising her employer was justified under her employer’s code of conduct because of their connection with her work, notwithstanding being out of office hours and using her personal twitter account. Directors should ensure their company’s social media policy and guidelines are accessible to and easily understood by officers and employees and that they are reinforced through regular training. See G+T’s article “To tweet or not to tweet? When social media is grounds for dismissal” for more on the case and factors to consider when an employee makes a critical social media post.
ASIC remakes purchase plan relief. ASIC has remade the relief in Class Order 09/425, which provides ASX-listed issuers of shares and interests under purchase plans relief from the requirement to prepare a prospectus or Product Disclosure Statement if certain conditions are satisfied and was due to expire on 1 October 2019. Importantly, the new instrument will continue the effect of the previous instrument, but increases the participation limit for each registered holder in a 12-month period from $15,000 to $30,000, meaning that SPPs may well become a default capital raising mechanism for companies with large retail shareholder bases.
THE WEEK AHEAD
Predictions of a flat outlook for Australian economy. The Australian Bureau of Statistics predicts economic growth will be just 1.5% for this financial year — the slowest since 2009 — which has seen Treasurer Josh Frydenberg trigger a national debate, suggesting company boards need to search harder to invest and improve productivity instead of paying dividends and/or undertaking share buybacks. This has been met with calls from business to Government to reduce impediments to growth by reducing red tape and ending energy policy uncertainty. The debate will continue to play out during what will be a very big week in terms of economic data: with the second quarter current account figures, July retail trading, Tuesday’s RBA interest rate decision and a slew of US and China economic policies producing a volatile mix for investors and corporate decision-makers alike.