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 trends in M&A activity, ASX’s latest compliance update, and a raft of governmental and regulatory developments in response to COVID-19.
YOUR KEY BOARDROOM BRIEF
G+T’s review of public M&A transactions in 2019. G+T’s Takeovers + Schemes Review (to view our key highlights click here) examines the previous year’s public M+A transactions valued over $50 million. For Directors familiar with the annual publication, we typically provide our perspective on what the trends for Australian M+A in the previous year might mean for this year. However, the uncertainty created by the COVID-19 pandemic has meant we’ve had to withdraw our own forecasts from this year’s Review. Instead, see our G+T article “COVID-19 M+A in a time of crisis” for some real time comments on its impact on the current Australian M+A and equity capital market landscape.
ASIC and ASX – emergency reforms to assist ASX listed entities respond to COVID-19. ASX’s suite of temporary measures is aimed at facilitating capital raisings and assisting listed entities to meet their ASX Listing Rule obligations amid the continuing challenges facing businesses as a result of the COVID-19 pandemic. ASIC’s temporary relief will allow “low doc” placements, rights issues and share purchase plans where a listed company has been suspended for a total of up to 10 (rather than 5) days in the previous 12-month period. ASIC will revoke its relief with 30 days’ notice and its decision to revoke will be based on an assessment of the market and in consultation with key stakeholders. We expect these measures will see institutional placements emerge as the preferred capital raising structure in the near-term. See our G+T article “ASIC and ASX introduce emergency reforms in response to the impact of COVID-19 on ASX listed entities” for an overview of these temporary reforms.
ASX releases compliance update for March 2019. In addition to the emergency reforms mentioned above, ASX’s latest compliance update, released on 31 March 2020, provides guidance on meeting continuous disclosure obligations during the COVID-19 situation, reporting relief for various entities and recent misleading COVID-19 announcements. ASX also advises the implementation timetable for the CHESS replacement system is being revised.
ASIC releases market integrity update – a COVID-19 special issue. ASIC’s latest market integrity update unsurprisingly emphasises the market volatility in light of COVID-19 including guidelines for upcoming AGM and financial reporting requirements. Directors should note individual applications are not required to take advantage of ASIC’s “no action” relief permitting the postponement of AGMs by up to two months. As pressure mounts on companies to consider capital raising scenarios, Directors must balance a range of considerations such as the need for quick and certain capital, and the cost to and possible dilution of existing shareholders. This includes fairness between shareholders (both institutional and retail), recognising that, where circumstances allow, pro rata rights offers and SPPs can help achieve fairness between investors.
Might your company benefit from the ATO’s COVID-19 measures? The ATO is allowing some large PAYG withholding businesses to defer their payment of PAYG withholding tax deducted from employee salaries and wages and deferral may even be interest free. The ATO’s guidance says all affected businesses (regardless of size) can get a 6-month deferral of PAYG instalments, but not PAYG withholding, on application – but the concession has been leniently granted. See our short G+T guide “Big businesses allowed to use PAYG withheld to stay afloat” for some practical information.
COVID-19 – employment considerations. The coronavirus crisis has created unprecedented difficulties for Australian workplaces. See our G+T article “COVID-19: when can you stand-down an employee?” for information about unpaid stand-down provisions of the Fair Work Act and recent changes to legislation and modern awards to deal with the employment implications of COVID-19. Also, click here for information on pandemic leave proposals.
THE WEEK AHEAD
Government stimulus packages keep on coming – what’s next? Over the past week we’ve seen a raft of further measures implemented by the Australian Government including a $130 billion jobseeker payment package, a $1.1 billion injection into mental health and telehealth services and other wage subsidy and childcare measures. This week, attention is likely to turn to the medium to long term economic impacts of these policies, as the debt market is asked to digest at least $250 billion in new debt issuance by the Australian Government. RBA intervention has been required recently to stabilise the bond market in the last few weeks, and Directors should pay close attention to bond yields for any signs that the market is becoming disorderly, which could have system-wide implications for liquidity and borrowing costs.