31/08/2020

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 recent ASIC relief to facilitate escrow and advertising relief for IPOs, ASX’s Australian Investor Study 2020 results and ASIC’s enhanced regulatory sandbox guidance.

YOUR KEY BOARDROOM BRIEF

ASIC provides relief for companies planning an IPO.  As part of its efforts to reduce red tape, ASIC has now made it possible to avoid the need to apply for two common forms of relief that many issuers require to conduct an IPO in Australia.  The relief, which takes immediate effect, facilitates voluntary escrow over more than 20% of the IPO company’s shares, and allows issuers to communicate more freely with employees, former employees and shareholders about a potential IPO without obtaining dispensation from the broad restrictions in the Corporations Act on pre-prospectus advertising (click here for the instrument). While technical in nature (and still subject to some conditions and limitations), the relief removes a layer of complexity in what is already an increasingly complex pathway to listing on ASX.  Alongside the relief, ASIC has updated ASIC Regulatory Guide 5 in relation to voluntary escrow arrangements and ASIC Regulatory Guide 254 in relation to advertising and publicity for offers of securities that require a disclosure document, which now provide guidance on the circumstances under which an issuer may rely upon ASIC's relief.  See ASIC’s media release and our G+T article “ASIC facilitating IPOs – relief for escrow and advertising” for more analysis.

ASX releases Australian Investor Study 2020.  ASX’s Australian Investor Study 2020, based on survey results of approximately 5,000 people in January 2020, has found that many Australian investors have been able to adapt to the challenging market conditions caused by the COVID-19 pandemic, with over 9 million Australians holding investments outside their home and super.  22% of investors aged between 35 and 64 say they will delay their retirement as a result of recent market performance, and 54% of investors have made changes to their portfolios over the three months prior to May 2020.  When respondents were asked about the effects of COVID on their investment priorities, sustainability of dividends (36%) and diversification (31%) ranked highest in order of priority.  The majority of current investors intend to make new investments in the coming year. Of those planning to invest further, 57% have indicated that they will invest in Australian shares and 28% in exchange traded funds.  The report also highlights a measurable shift in investor demographics, with a growing number of women and younger Australians actively investing.  See ASX’s media release.

ASIC releases guidance for Government’s enhanced regulatory sandbox.   ASIC’s guidance – comprising Information Sheet 248, Infographic and key features document – is intended to assist innovative financial businesses to test their products and services under the government's enhanced regulatory sandbox (ERS), scheduled to commence on 1 September 2020.  The ERS is a class waiver from licensing for certain financial services and credit activities and will supersede the ASIC sandbox issued in December 2016. The ERS expands on the ASIC sandbox and allows for a longer testing period (of up to 24 months) for a broader range of financial services and credit activities and for a wider range of businesses (including existing licensees).  For applicants to make use of the ERS, they will need to complete a prescribed notification form and explain how their proposed product or service satisfies a new public benefit test and innovation test. See also ASIC's Innovation Hub.

THE WEEK AHEAD

Border Wars. We expect the “Border Wars” to ramp up in the coming months as the Federal Government seeks to better integrate the States in the nation’s COVID-19 recovery plan.  One interesting chart from the RBA’s August chart deck (here) shows one of the reasons why: the States with the harshest border rules (voluntarily, in the case of WA and Queensland, and mandatorily, in the case of Victoria) are currently suffering under the highest rates of unemployment in the country.


ATO to release corporate tax transparency data.  The Australian Taxation Office (ATO) will shortly be writing to certain corporate tax entities to advise them that the ATO's 2018-19 Report of entity tax information is being prepared for publication in order to give those entities an opportunity to comment before formal release. The ATO is required to publish certain tax information of corporate tax entities each year, if the entity is: (i) an Australian public or foreign owned entity with a total income of $100 million or more; (ii) an Australian resident private company with a total income of $200 million or more; or (iii) an entity reporting petroleum resource rent tax payable.

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Our COVID-19 hub collates important articles and legal advice on various aspects of COVID-19 on how it may impact your business.