In this edition, we discuss the release of policy specifications on proposed reforms to Australia’s beneficial ownership regime for unlisted entities, the Federal Government’s response to the report on the statutory review of the Modern Slavery Act 2018 (Cth) (Modern Slavery Act) and its proposed digital competition regime which seeks to promote competition.
As this is the final edition of Boardroom Brief for 2024 (we will recommence after the Christmas hiatus on 3 February 2025), in Over the Horizon, we reflect on the year that was and discuss our expectations for deal making and corporate governance in the Australian market for 2025.
Regulatory
Treasury releases policy specifications on beneficial ownership reforms for unlisted entities
On 5 December 2024, the Federal Treasury released the policy specifications for proposed reforms to Australia’s beneficial ownership regime for unlisted entities. This follows the release of exposure draft legislation last month proposing reforms to Australia’s beneficial ownership regime for listed entities, which was discussed in a recent G+T Insight. The policy specifications build on feedback received during a consultation process in late 2022 and outline a staged approach which will broadly involve the introduction of: (1) a requirement for unlisted companies to collect, verify and record information about beneficial owners; (2) a requirement for beneficial owners to self-identify to unlisted companies; and (3) expanded powers to the Australian Securities and Investments Commission (ASIC) to enforce the new obligations. The policy parameters will underpin exposure draft legislation which will be released in due course for formal consultation.
Government responds to report on the statutory review of the Modern Slavery Act
On 2 December 2024, the Federal Government released its response to the ‘Report of the statutory review of the Modern Slavery Act 2018 (Cth): The first three years’, which made 30 recommendations to increase the effectiveness of Australia’s modern slavery laws. The Government agreed, or agreed in principle, to 25 of the 30 recommendations, with the remaining five noted for further consideration. Moving forward, implementation of the Government’s response and further consideration of reforms to the Modern Slavery Act will progress under four key areas: (1) an effective compliance and enforcement framework; (2) increased clarity and simplicity; (3) enhanced support and guidance; and (4) continuous improvement. The Government has pledged to introduce penalties for non-compliance, addressing a gap in the current framework, to ensure that entities meet their reporting obligations and promote transparency. The Government will also improve guidance materials and develop a standardised template for modern slavery statements. Additional measures, such as high-risk declarations and enhanced tools for assessing modern slavery risks, will be considered in consultation with stakeholders and the recently appointed inaugural Anti-Slavery Commissioner, Mr Chris Evans. The Attorney-General’s Department will lead the implementation of the response, engaging with stakeholders to ensure meaningful input and effective reform.
Legal
Federal Government proposes digital competition regime to address platform dominance
On 2 December 2024, the Federal Government unveiled its proposal for a digital competition regime to address the dominance of major platforms in a bid to promote competition and deliver benefits such as lower prices and improved services for consumers. Overseen by the Australian Competition and Consumer Commission, the initiative seeks to modernise Australia’s competition laws in response to the digital economy's rapid evolution. Designated platforms that pose significant competition risks but are critical to the economy are poised to face new rules targeting anti-competitive practices, such as higher costs, lack of choice, unfair terms and barriers to switching. These reforms aim to create fairer platforms for consumers and a level playing field for businesses, fostering innovation and transparency. Penalties for non-compliance are proposed to align with the maximum financial penalties under Competition and Consumer Act 2010 (Cth). Submissions on the proposal close on 14 February 2025.
Over the horizon
More deals, more regulation and more change over the horizon for Australia in 2025
2024 was marked by heightened regulatory litigation – with the first successful greenwashing claim brought by ASIC (discussed in detail in a G+T Insight) – proof that regulatory enforcement is more than just a theoretical threat on the horizon for non-compliant entities. While the full effects of proposed merger clearance reforms (as discussed in a previous edition of Boardroom Brief and G+T Insight) will take time to reveal themselves, the now imminent implementation of those reforms may trigger an acceleration in deal flow, potentially turbo-charged by an expectation that the RBA will (reluctantly) follow the United States’ lead and lower official interest rates in the second quarter of the calendar year. As discussed in a previous edition of Boardroom Brief, Australia’s trade relationship with the United States and China means we will keenly feel the impacts of protectionist policies that the President-elect implements upon taking office, just as China’s own attempts to kick-start its faltering economy are stuttering. From a corporate governance perspective, it seems unlikely that there will be any substantial roll-back of the trend towards increased regulation. Indeed, stakeholders are looking to board members and executives more than ever to uphold strong governance practices and guide them through rigorous regulatory developments in areas as diverse as environmental protection, modern slavery and money laundering. We expect the size (and cost) of listed company boards to increase in order to meet these stakeholder demands: whether the juice is worth the squeeze in terms of regulatory outcomes remains to be seen. All in all, we expect 2025 to be a continuation of 2024, with geopolitics, interest rates, technological change and ‘deglobalisation’ driving both deal activity and regulatory and governance trends for the foreseeable future.