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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
Welcome to Edition 72 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.
ACCC commences first ever court action for “gun-jumping”. On 12 July 2018, the Australian Competition & Consumer Commission (ACCC) confirmed proceedings had been initiated in the Federal Court against Cyrosite Limited for alleged cartel conduct in relation to its entry into an asset sale agreement with Cell Care Australia Pty Ltd (Cell Care). On signing the asset sale agreement, Cell Care made an upfront, non-refundable payment to Cryosite in return for Cryosite referring all customer enquiries to Cell Care before the acquisition had completed (the parties being, at this time, the only competitors for supplying cord blood and tissue banking services in Australia). Directors, when negotiating acquisitions, should be mindful of transitional provisions being viewed by the ACCC as “gun-jumping” – in essence, where competitor parties combine or coordinate their conduct before completion of the deal. The ACCC’s action serves as a reminder that parties must remain independent and continue to act as competitors until completion. See also G+T article “First Australian M&A gun-jumping prosecution: ACCC v Cryosite Limited”.
Government establishes hotline to combat phoenixing. On 16 July 2018, the Government announced a new Phoenix Hotline to combat phoenixing by directors: ‘phoenixing’ being when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts to creditors. The Hotline is confidential, open to the general public and may be accessed by phone, email or an online ATO form. Disclosures made through the Hotline will be subject to privacy and whistleblower laws. See the media release from the Minister for Revenue and Financial Services, the Hon. Kelly O’Dwyer, and the ATO website.
Government consults further on the Corporate Collective Investment Vehicle Bill. On 19 July 2018, the Government released its second tranche of the draft Bill and explanatory materials. The Corporate Collective Investment Vehicle (CIVV) will allow Australian fund managers to market to participating Asian financial markets using a well-recognised corporate structure vehicle, complementing the Asia Region Funds Passport initiative introduced into Parliament earlier this year. The second tranche materials focus on aspects of the regulatory framework for CCIVs, including the external administration, application of the Corporations Act financial services regime to CCIVs, and penalty provisions. Submissions can be made until 10 August 2018.
Government consults on changes to ABN system. On 20 July 2018, the Government released a consultation paper on its proposals for modernising the ABN system, which are intended to enhance confidence in the identity and legitimacy of Australian businesses. The proposals envisage adjustments to ABN entitlement rules, imposition of conditions on ABN holders and introduction of new verification procedures (including also a renewal process and renewal fee). Submissions can be made until 31 August 2018.
IOSCO consultation on good practices for audit committees closes tomorrow. IOSCO’s consultation - launched in response to reports by regulators indicating a need to improve audit quality and consistency of audit execution - seeks feedback on proposed good practices for audit committees of issuers of listed securities. The quality of an issuer’s financial report, supported by an independent external audit, is key to market and investor confidence. See the consultation report here.
Upcoming ASX periodic reporting deadline. Quarterly reports for mining and commitments test entities are due by Tuesday 31 July 2018. Under the ASX’s new “get tough” approach, failure to lodge the report on time will result in an automatic suspension of the entity’s securities.