Welcome to Edition 70 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

ASX releases Activity Report for June 2018. On 5 July 2018, ASX released its Group Monthly Activity Report for June 2018 - total capital raised during the month was $4.6 billion, representing a 29% decrease on the previous corresponding period (pcp). The average number of daily trades was 2% higher than June 2017 and the average daily value traded on-market was $4.8 billion, down 3% compared to June 2017. The average number of daily traded options was 11% lower than June 2017, while the value of securities held in CHESS was 15% higher than June 2017. See the ASX Report here. 

ASX confirms Guidance Note amendments. Last week, the ASX published updated Guidance Notes reflecting changes to the annual listing fees for quotation of additional securities (see updated Guidance Note 15A) and new rules for foreign entities wishing to list on the ASX (see section 3.20 in updated Guidance Note 1 and section 3.2 in updated Guidance Note 4). In particular, Directors should note the listing prospectus for an entity established outside Australia must now include a summary of any taxes or duties payable in that entity’s place of incorporation or, if there are no such taxes or duties payable, a statement to that effect.

ASIC consults on proposed changes to capital requirements for market participants. On 4 July 2018, ASIC released a consultation paper which proposes changes to the minimum capital requirements for market participants. The proposals are intended to introduce consistency across different markets as well as address discrepancies between the ASIC market integrity rules, the AFSL financial requirements and the market operator’s capital requirements. They envisage compliance with a risk-based capital regime, rather than a net tangible asset requirement. Submissions can be made to ASIC until 15 August 2018.

ASIC releases new prices for regulatory services. On 4 July 2018, ASIC announced fee increases for specific regulatory services, following legislation enacted by the Government on 28 June 2018; the new fees more reflective of the actual cost to ASIC associated with the relevant regulatory service. Services affected include licensing and professional registrations, applications for relief, requests for changes to market operating rules and ASIC’s formal compliance review of documents lodged under the Corporations Act. Directors should note that fees for many routine actions have increased significantly.

THE WEEK AHEAD

GST Reform. In Edition 68, we asked whether the Commonwealth Government would be prepared to take on the fraught issue of GST reform at the next election, potentially incurring the wrath of beneficiary states by proposing an equalisation of distributions. That question was answered last week, when Treasurer Scott Morrison announced that the new system will result in nearly $5 billion being distributed to Western Australia over six years. In doing so, however, he ignored central planks of the Productivity Commission’s inquiry report into horizontal fiscal equalisation (HFE) and the distribution of GST. The Report concluded that HFE system’s objective should be refocussed to provide States with the fiscal capacity to provide services and infrastructure of a reasonable rather than of the same standard. Western Australia, in particular, now waits to see whether federal Labor endorses the Government’s proposed strategy – which will be implemented by an inter-governmental agreement rather than legislation. Clarity is expected to emerge in the next week.

Upcoming deadlines this week for Government consultations.

• Government’s consultation on reforms to address corporate misuse of the FEG scheme closes today. 
   
• Government’s consultation on its Corporate Collective Investment Vehicle (CIVV) initiative closes on Wednesday. As reported last month in Boardroom Brief, the proposals are intended to allow Australian fund managers to market to participating Asian financial markets using a well-recognised corporate structure vehicle, complementing the Asia Region Funds Passport initiative introduced into Parliament earlier this year.