Insights

26/02/18

Boardroom Brief: Week commencing 26 February 2018

Welcome to Edition 51 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.

KEY BOARDROOM BRIEF

Banking Executive Accountability Regime (BEAR) Bill receives royal assent. The BEAR Bill, imposing higher standards of behaviour in the banking sector, has now received royal assent. This legislation is part of a broader suite of financial services reforms delivering on the Turnbull Government’s commitment to restore the nation’s trust and confidence in the banking system. Where the BEAR obligations are not met, APRA can now seek substantial fines, more easily disqualify individuals and ensure banks’ remuneration policies result in financial consequences for individuals. Banks will be required, among other things, to register their senior executives and directors (accountable persons) with APRA and provide greater clarity regarding their responsibilities. The BEAR commences on 1 July 2018 for large authorised deposit-taking institutions (ADIs) and on 1 July 2019 for small and medium ADIs.

IMF endorses Australia’s economic performance. The IMF’s annual report on Australia’s economy (published last Wednesday) praised Australia’s strong economic performance. The IMF considers that the economic outlook for Australia is positive and remains on track to accelerate to above-trend growth. The IMF attributes Australia’s sustained economic success to a flexible exchange rate, credible and transparent monetary policy, strong institutions and sound financial sector supervision. The IMF considers the Turnbull Government is delivering on its fiscal strategy and efforts to bring the budget back to balance, suggesting the Government’s budget repair strategy was ‘appropriately anchored’ by the IMF's medium-term targets. See Treasurer of Commonwealth of Australia, the Hon Scott Morrison’s media release.

Mergermarket report on 2017 M&A activity and 2018 outlook. Mergermarket, in association with Merrill Corporation, has published a report on 2017 M&A activity in the Americas; offering insights on notable deals, sector performance and trends that impacted dealmaking through 2017. Highlights from the report include: (i) deal value in North America of US$1.4tn was down 12.2% from 2016 whilst Latin American deals totalling US$94.3bn were 23.3% up on the previous year; (ii) technology continues to attract a high level of interest and saw the highest volume of deals (1,357) in North America in 2017; and (iii) in 2018, Canada is expected to be a top contributor to the region’s dealmaking activity, while Mexico, Colombia and Brazil are predicted to see a decline in M&A due to upcoming elections.

IOSCO consults on guidance to address conflicts of interest in the equity capital raising process. Directors involved in capital markets activities sometimes complain of a lack of transparency on the part of banks and brokers undertaking that activity on their behalf, and this is evidently a concern prevalent in several advanced jurisdictions. IOSCO - the peak-policy setting body for securities regulators globally, is seeking views on eight measures, grouped by each of the key stages of the equity capital raising process, for tackling the conflicts of interest (and associated misconduct risks) stemming from the role of intermediaries. IOSCO believes that the Guidance could help enhance the range and quality of timely information made available to investors during equity capital raising, improve the transparency of allocations and increase the efficiency and integrity of the overall process. Submissions are due by 4 April 2018. See IOSCO’s media release and Report.

THE WEEK AHEAD

Upcoming deadline for periodic reports. Listed entities (other than mining exploration and oil and gas exploration entities) are reminded of the deadline this Wednesday for submission to ASX of their: (i) half year accounts (June year-end); and (ii) preliminary final report (December year-end). Failure to lodge the relevant documents on time will result in an automatic suspension of the entity's securities.

Junior Mineral Exploration Incentive (JMEI). The legislation to implement the JMEI is currently before the Senate, with a number of minor procedural amendments being proposed by the Opposition. With only 3 sitting days left this session, time is running out for the Bill to become law in time for the 2017-18 financial year.

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