Welcome to Edition 57 of Boardroom Brief.
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.
KEY BOARDROOM BRIEF
Government consults on ADIs for the purposes of the BEAR Bill. The BEAR Bill - which is designed to impose higher standards of behaviour in the banking sector - commences on 1 July this year for large authorised deposit-taking institutions (ADIs) and on 1 July 2019 for small and medium ADIs. Last week, the Treasury released for public consultation an exposure draft and accompanying explanatory material of new legislation for determining the size of an ADI for the purposes of the BEAR Bill. It provides that: (i) a small ADI would have less than or equal to $10 billion on a three year average of total resident assets; (ii) a medium ADI would have between $10 billion and $100 billion on a three year average of total resident assets; and (iii) a large ADI would be any ADI with greater than or equal to $100 billion on a three year average of total resident assets. Submissions must be made by 20 April 2018. See Treasury’s media release and Treasurer of Commonwealth of Australia, the Hon Scott Morrison’s media release.
IOSCO issues recommendations to improve regulatory reporting and transparency in corporate bond markets. On 5 April 2018, the International Organisation of Securities Commissions (IOSCO) published its recommendations for improving the information on secondary corporate bond markets available to both regulators and the public. The recommendations seek to ensure that regulators have better access to information so they can perform their functions more effectively, and to enhance cross-border information sharing and understanding. The transparency recommendations aim to support the price discovery process and facilitate better informed investment choices. See IOSCO’s media release. Despite a number of initiatives in Australia in recent years, the local corporate bond market remains under-developed by global standards. Directors should bear in mind there is now a simplified procedure under the Corporations Act for the offering of simple corporate bonds, which may provide an attractive alternative to equity financing in some cases.
THE WEEK AHEAD
US sanctions imposed on Russian oligarchs and government officials. As of last week, US sanctions now apply to seven Russian oligarchs and 17 senior government officials as well as 12 companies owned by the oligarchs, the state arms exporter and a bank – a measure motivated by Russia’s alleged meddling in the 2016 US presidential election as well as Russia’s activities in Crimea, eastern Ukraine and Syria.
Uncertainty over Trump’s trade policies continues. US President Donald Trump’s 25% and 10% tariffs on steel and aluminium announced at the beginning of March have now been rolled back to only a few nations, including China, although excluding Europe, Australia, Brazil and Canada (among others). As the trade debate now focuses on relations between the US and China, the considerable uncertainty over the extent and timing of measures from both sides continues to impact investor confidence.