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 latest governmental and regulatory developments in response to COVID-19.


As quarantine and social isolation measures intensify and large parts of the nation grind to a halt, it should be of no surprise to Directors that a fresh round of economic stimulus and other support measures in response to COVID-19 occupied last week.

ASIC-related developments in response to COVID-19.

  • Guidelines for AGM meetings and financial reporting requirements For public companies with 31 December balance dates that are required to hold an AGM by 31 May 2020, ASIC has confirmed it will take no action if the AGMs are postponed for 2 months (ie, until 31 July) and supports the holding of AGMs using appropriate technology (see ASIC’s media release). At present, ASIC does not consider there to be significant issues for entities to meet their full-year and half-year financial reporting obligations at 31 December 2019. ASIC will continue to monitor how market conditions and COVID-19 may affect financial reporting obligations.
  • Trading limits to ensure equity market resiliencyAustralian equity markets have seen record trading volumes in the last two weeks including also exponential increases in the number of trades executed, with a particularly large increase in trades last Friday. While there was no disruption to market operations on Friday, there was a significant backlog of work required to be undertaken over the weekend by the exchanges and trading participants. If the number of trades executed continues to increase, it will put strain on the processing and risk management capabilities of market infrastructure and market participants. Accordingly, ASIC has issued directions under the ASIC Market Integrity Rules to several large equity market participants, requiring those participants to limit the number of trades executed each day by up to 25% until further notice. This action will require high volume participants and their clients to actively manage their volumes. The limits are not expected to impact the ability of retail consumers to execute trades. See ASIC’s media release.

Government actions in response to COVID-19.

  • Relief from insolvent trading laws The Government has announced that company directors (of operating but not holding companies) will not be personally liable for insolvent trading for a period of six months, in relation to debts incurred in the ordinary course of business. However, Directors should note that this measure does not relieve directors of their duty to act in the best interests of their company, or, if their company is insolvent or approaching insolvency, to take account of the interests of creditors, and to at all times act with due care and attention. It also does not mean that the company itself is not insolvent, with all the consequences that may bring. Directors should analyse whether their companies are solvent and likely to continue to be solvent over a period of one, three and six months. In these times of uncertainty, that will involve making reasonable assumptions about likely scenarios and is likely to involve assessing best, likely and worst cases.
  • Government establishes Business Liaison Unit on COVID-19On Sunday 15 March 2020, the Government announced the creation of a new Coronavirus Business Liaison Unit in Treasury to build on existing efforts to support confidence, employment and business continuity. The role of the unit will be to engage with peak business groups on systemic issues relating to COVID-19 to ensure these are being addressed by the Government. See the Treasurer's media release.
  • RBA emergency rate cut In an attempt to cushion the blow of the coronavirus pandemic, the RBA made an emergency cash rate cut to a new record-low 0.25%. Thursday’s widely anticipated move means the central bank has also pulled the trigger on its first-ever quantitative easing program as it bids to boost cash supply and encourage lending and investment in support of the nation’s virus-ravaged economy. It has also created a $90 billion lending facility to banks for small and medium businesses; this in addition to the Government’s already announced $17.6 billion package with further rounds of economic stimulus measures to be expected.

AICD course deferrals. The AICD’s Business Centre and Member Lounges are now closed and, as of this Thursday, all AICD courses that have not started have been deferred. The AICD is considering whether it can deliver its flagship Foundations of Directorship and Company Directors courses online.

Using tax to manage cash flows?  COVID-19 is having a serious impact on cash flows of many businesses. While it is tempting to use the tax man as a short-term lender, this path is fraught with danger, especially when the “tax” being borrowed is actually other people’s tax or benefits. See G+T’s short and timely guide “COVID-19 – the danger lurking in using tax to manage cash flows” on related considerations.


Further measures. As the COVID-19 situation is evolving on a daily, if not hourly basis, it is difficult to anticipate what further measures may be implemented by Commonwealth and State Governments this week. What seems clear is that current social distancing measures are likely to be strengthened further before they are eased. Further, based on the Prime Minister’s guidance during yesterday’s address to the nation, significant interruption to business seems likely for up to six months, meaning this should be the base case scenario for most business planning by Directors, with upside potential if conditions improve – which we all hope for. The situation, and the policy response, remains very fluid. Directors can check in on the Commonwealth Treasury coronavirus information site from time to time for the latest information on assistance programmes.

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