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 AICD’s latest gender diversity progress report, ASIC’s recent update on its enforcement activities, proposed foreign acquisition restrictions and the ACCC’s 2020 priorities.
A short week this week due to the Labour Day holiday in Western Australia.
YOUR KEY BOARDROOM BRIEF
Women hold 30.7% of ASX200 board seats. The most recent Australian Institute of Company Directors (AICD) gender diversity report reveals that, as at 31 January 2020, women hold 30.7% of ASX 200 board seats. The percentage of women on ASX 200 boards reached 30% for the first time in December 2019.
ASIC update on enforcement and regulatory work. ASIC’s update provides an overview of its activities since September 2019, including its implementation of the recommendations of the Financial Services Royal Commission and use of ASIC’s enhanced regulatory toolkit to support a tougher response to market, corporate and financial sector misconduct. As at 1 January 2020, ASIC had 316 investigations on foot covering a range of misconduct – including in relation to directors’ and officer’s breaches, insider trading and market manipulation, and auditor and liquidator breaches. The update notes that ASIC enforcement investigations from January 2019 to January 2020 are up 10%. Directors should keep an eye out for ASIC’s more detailed six-monthly enforcement update for H2 2019 expected to be released later this month.
Proposals to restrict foreign acquisitions of strategic assets. If passed, the Foreign Acquisitions and Takeovers Act Strategic Assets Bill, which was last week introduced by the House of Representatives, will prevent foreign persons from acquiring a 10% or greater interest in Australian land, water or other assets that are either of "strategic economic importance" or "strategic defensive importance" to Australia unless both Houses of Parliament pass a resolution to determine otherwise. An interest in Australian land will include, among other things, both substantive leases and sales. The determination of whether an asset is of "strategic economic importance" or "strategic defensive importance" would be determined by the Foreign Ownership Assessment Board, a new board the composition of which is to be determined by a majority of the Senate. Click here for a recent interview by ABC Radio of G+T Partner Deborah Johns on the role of Australia’s Foreign Investment Review Board as an advisory body. Directors engaged in or contemplating transactions with foreign investors should take note of the evolving foreign investment landscape in Australia, particularly in the realm of security and defence.
ACCC announces 2020 compliance and enforcement priorities. Last week, ACCC Chair Rod Sims speech provided an overview of the ACCC’s priorities for this year. Among the priorities are cartel conduct, anti-competitive conduct (with a focus in 2020 on the digital platforms, energy and telecommunications, construction and funeral services sectors), misleading food product promotions and product safety. Of note to Directors, the ACCC has advised that when deciding whether to pursue a matter, it will consider whether the conduct: (i) is of significant public interest or concern; (ii) results in substantial consumer or small business detriment; (ii) concerns national conduct by large traders, with a potential for greater consumer detriment and influence over other market participants; (iii) involves a significant new or emerging market issue or where the ACCC’s action is likely to have an educative or deterrent effect; and (iv) where the ACCC’s action will assist to clarify aspects of the law (you can read the 2 page summary here or full list of priorities here).
THE WEEK AHEAD
Australian response to counter coronavirus hit. While the WHO is yet to declare it a pandemic, the spread of coronavirus beyond its epicentre of China to over 50 countries has prompted Prime Minister Scott Morrison to activate an emergency response plan, targeting stimulus for the most severely affected industries. The RBA has also cut interest rates to a new low of 0.5% in an attempt to contain the economic fallout from the escalating crisis. The Australian dollar is now at its lowest level relative to the US dollar since the global financial crisis. A report released last week by the Tourism Transport Forum predicted Australia's tourism industry will bleed $2 billion a month (worse than the SARS outbreak in 2003) and other analysts are hypothesising about unprecedented destruction to global supply chains if the virus isn’t contained by May. Some economists warn coronavirus could wipe between 0.3 to 7.9% from Australian GDP. Directors will need to monitor developments in real time and ensure contingency plans are in place to manage a potentially prolonged period of business disruption.
ASIC consults on relief for voluntary escrow and pre-prospectus communications. ASIC recently released a consultation paper (CP 328) on proposals to grant conditional relief for voluntary escrow arrangements and pre-prospectus communications in connection with an IPO. The relief, while fairly technical in its application, would facilitate communications and negotiations with pre-IPO shareholders and employees in the lead up to an IPO. Submissions can be made until 6 April 2020. See ASIC’s media release.