29/06/2020

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 how the Black Lives Matter movement may impact corporate governance in Australia, new ASIC e-signing and e-lodgement instruments, cyber-security and crypto-currency issues and forthcoming penalty increases for certain tax, superannuation and corporations law breaches.

YOUR KEY BOARDROOM BRIEF

Social justice and investment.  In light of the Black Lives Matter movement, will we see Australian corporates adopt a more public stance against racism?  In the same way leading corporates with trusted brands took a leading role in supporting the “yes” case for marriage equality, we are seeing the early signs of engagement with the current debate over systemic racism in developed economies.  Recently a coalition of over 120 investors, asset managers and business leaders under the banner of “Racial Justice Investing” signed a statement of solidarity to address systemic racism, vowing to integrate racial justice into their investment decision-making. Directors are already becoming increasingly aware of the need to monitor developing social trends and their potential impact on business and decision-making, and in our view this latest issue will also prove “too big to ignore”.  We expect racial diversity – not just gender diversity – to emerge as a hot-spot in the forthcoming AGM season.

ASIC facilitates e-signing and e-lodgement of cross-guarantee deeds. On 24 June 2020, ASIC issued Instrument 2020/612 to facilitate the electronic signing (including by using a cloud-based signature platform like DocuSign) and lodgement of documents while the Corporations (Coronavirus Economic Response) Determination (No 1) 2020 is in force.  Directors should note that, where companies wish to take advantage of the relief, the parties must comply with the terms of Instrument 2016/785.  See also ASIC’s updated Information Sheet 24 Deeds of Cross Guarantee for additional guidance on protecting personal information when signing and lodging documents in this way.

Spike in crypto-currency investment scams. ASIC has reported a 20% rise in investment scams from March 2020 to May 2020 compared to the same period last year.  The scams relate to fake crypto-assets (or crypto currencies), term deposits, investments and those that start via romance sites.  Similarly, the ACCC reported last week the cost of scams has increased by 24% compared to 2018 levels, with Australians losing over $634 million to scams in 2019.  Business email compromise scams, investment scams and dating/romance scams were noted as the three most costly.  This is consistent with anecdotal evidence of increasing cyber-crime globally as hackers capitalise on COVID-19 related interruptions to IT integrity arrangements.  Directors will need to ensure their IT teams remain vigilant over the coming months, as cyber-security measures continue to be tested by both state-based and private actors.

Penalty increases for certain tax, superannuation and corporations law breaches. From 1 July 2020, the penalty unit applicable for Commonwealth criminal offences committed on or after that date will be $222 (up from $210) for the purposes of the Crimes Act 1914 (Cth) (Crimes Act).  The penalty unit for Commonwealth criminal offences is adjusted every three years in line with the Consumer Price Index based on the 31 March quarter.

ATO surveillance of use of COVID-19 stimulus measures.COVID-19 stimulus measures – what’s on the ATO’s radar?” for discussion of the ATO’s awareness of arrangements being made to artificially create entitlements to, and obtain benefits from, the Government’s COVID-19 stimulus measures (such as JobKeeper, early release of superannuation and the cash flow boost for employers) and its efforts to target fraud and such schemes.

THE WEEK AHEAD

Coronavirus and economics. Reopening and rebooting the economy is already proving troublesome as a spike in both infections and job losses last week has jolted the country out of its post-lockdown complacency.  The RBA Governor, Philip Lowe, has also urged banks to keep lending, as companies restructure their operations and further unemployment looms when Government assistance winds down after 30 September.  Policymakers around the globe are visibly struggling with how best to manage and prepare for the challenges ahead. A sharp drop on Wall Street last Friday as confirmed new coronavirus infections in the US hit an all-time high, underlines renewed investor nervousness.  Significant public debate on whether to reverse course on the reopening of businesses is likely to continue for some time.

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