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 Federal Government’s consultation on making temporary COVID-19 relief in relation to virtual meetings and electronic signing permanent, proposed changes to FIRB’s moneylending exemption and ASIC and the RBA’s expectations of ASX’s CHESS replacement. We also take a look at the week ahead in light of President Trump’s COVID-19 recovery and the upcoming Federal budget.
YOUR KEY BOARDROOM BRIEF
Federal Government to consult on making virtual AGMs and e-signatures permanent. The Federal Government has released its Digital Business Plan, which will form a key part of the government’s budget and economic plan to support businesses in recovering, growing businesses and creating new jobs. The key elements of the Digital Business Plan include consulting on making the temporary reforms to allow companies to hold virtual meetings and executed documents electronically permanent. See the media release here.
Changes to FIRB moneylending exemption. Proposed changes to the existing moneylending exemption under the FIRB legislative regime mean that secured lenders which are foreign persons will (in certain circumstances) need to notify FIRB and obtain no objection notices in order to take security interests in certain securities, assets, land or tenements with national security significance. These changes will increase costs and timelines for transactions involving such assets. Additionally, it is possible that a covered transaction may be prohibited, and there are severe penalties for non-compliance. It may be possible for lenders that are “foreign persons” and frequently take security over assets of national security significance to obtain a standing exemption from the Treasurer which may address some of these difficulties, however the grant of these exemption certificates will be subject to the Treasurer’s discretion and not likely to be easily obtained. See the proposed changes here.
ASIC and RBA announce expectations for CHESS replacement. As directors will be aware, ASX proposes to replace the CHESS System with a blockchain platform. This shift towards distributed ledger technology will be the first move in this direction for major financial infrastructure globally, and has for this reason been closely monitored by regulators. ASIC and the RBA have now outlined their expectations of ASX with respect to the CHESS replacement project. In summary, ASX is expected to replace CHESS as soon as this can be safely achieved by ASX and users of CHESS. The new system is expected to achieve a significant uplift in intraday trade processing capacity and end-of-day processing performance. ASX is also expected to provide independent assurances to both ASIC and the RBA to demonstrate that it is meeting non-functional requirements. See ASIC’s media release here.
ON THE HORIZON
President Trump. Equity markets responded positively to news that the US President is responding positively to treatment for COVID-19. However, close attention will be paid to daily updates on his condition by White House medical staff. Experience elsewhere has shown that patients’ conditions may deteriorate after a period of improvement – and if that experience is repeated market volatility could well follow.
2020 Federal budget. The long awaited 2020 – 2021 Federal budget will be handed down tomorrow. The budget is likely to be the most highly anticipated the nation has seen in a long time, as it will determine the economic trajectory of Australia based on its ability to navigate out of the COVID-19 induced economic crisis. Australia’s gross national debt is expected to exceed A$1.1 trillion for the first time, as the Federal Government brings forward tax cuts and boosts spending to stimulate growth and employment.