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 ASX’s compliance update, ASIC’s market integrity update and Chair James Shipton’s speech, ALRC’s corporate liability reform proposals and extension of potential director liability for company tax liabilities.


ASX releases compliance update. ASX’s latest compliance update, released on 3 March 2020, provides an overview of recent changes to ASX Guidance Note 8 on continuous disclosure (click here for the mark-up). The amendments include: (i) additional guidance on the requirement to name counterparties to market sensitive contracts; (ii) materiality threshold updates for determining market sensitive earnings surprises; (iii) additional guidance on ASX’s enforcement powers for a breach of Listing Rule 3.1 or 3.1B; (iv) updates to align with the 4th Edition of the ASX Recommendations; and (v) updates for Federal Court decisions including the recent TPT v Myer, ASIC v Vocation and Master v Lombe (liquidator) decisions. For example, citing recent case authority, ASX suggests Directors of ASX 300 companies with “stable or predictable earnings” should consider applying a materiality threshold “closer to 5% than 10%”.  This increasingly prescriptive approach by ASX is likely to fuel rather than extinguish shareholder class action litigation.

ASIC releases market integrity update. ASIC’s March issue of its market integrity update urges all market stakeholders to be vigilant in light of the rising number of coronavirus cases. ASIC emphasises the importance of: (i) business continuity plans (including review and testing of them regularly, incorporating new information and addressing emerging challenges); (ii) checking the adequacy of back-up arrangements; (iii) stress testing systems and financial positions; and (iv) surveillance system alerts focusing on client risk limits. ASIC advises that some of the considerations in its Consultation Paper 314 (proposing new market integrity rules for technological and operational resilience) might be helpful to a company’s planning or review of maintenance and recovery of critical systems. ASIC is in the process of finalising its position following feedback on that consultation process.

ASIC Chair addresses Parliamentary Joint Committee. Among the matters covered by ASIC Chair James Shipton’s speech to the Parliamentary Joint Committee on 28 February 2020 were ASIC’s ongoing enforcement and regulatory work, its renewed governance and accountability framework, the strengthening of its risk management, enhancements to its workforce capabilities and its response to pandemic events. ASIC Chair notes: (i) a 100% increase in breach notifications following the Financial Services Royal Commission; and (ii) a 40% increase in complaints to the AFCA in its first year of operation compared to predecessors.

ALRC backpedals on individual liability for corporate misconduct proposals. In November 2019, the Australian Law Reform Commission (ALRC) issued a discussion paper recommending 23 proposals for reform of the Commonwealth corporate criminal law regime. These included two proposals (Proposals 9 and 10) for individual liability for corporate offences. While the ALRC still considers there is an accountability gap in relation to holding senior managers of large corporations liable for corporate misconduct, in light of developments since the publication of its discussion paper and feedback from stakeholders, the ALRC is no longer recommending the scheme be put forward to address this gap. The ALRC maintains its recommendation, though, that a detailed review of the effectiveness of individual accountability mechanisms for corporate misconduct be commissioned by December 2025.


ASX woes. At the time of print, the S&P ASX 200 index had closed down 470 points or just over 7% in the worst day’s trade since the GFC, as US stock futures point to a tough day ahead. The trigger was a plunge in oil prices which sent bond yields plummeting. The ASX’s market correction is now ~19.6% from the peak – just shy of a technical “bear market”. Directors will have cause to reconsider major corporate actions in the short term, as policy-makers across the globe scramble to develop a coherent response to the threat caused by the COVIC-19 outbreak.  Longer term, we expect many boards will be reassessing the integrity of their supply chains and looking to diversify where possible, as the world awakens to the extent of global dependence on Chinese manufacturing.

Director penalty notice regime extended from 1 April 2020. As if the liability position for Directors was not challenging enough, a word of warning about the planned extension of the director penalty notice (DPN) regime, under which directors can be personally liable for certain company tax liabilities. From 1 April 2020, directors may be held personally liable for any unpaid debts for goods and services tax (GST), luxury car tax (LCT) and wine equalisation tax (WET), in addition to the pay-as-you-go withholding (PAYGW) and superannuation guarantee contributions (SGC) debts already captured under the current DPN regime. In general, a director will be personally liable for the unpaid tax liabilities of their company 21 days after a DPN is issued.  In some circumstances the DPN can be remitted, but the opportunity for remission ceases once the penalty is "locked down". New directors and former directors who resigned after the tax debt accrued (even if this was before payment was due) may still be held personally liable in some circumstances. 

Upcoming period reporting deadlines.

  • This Friday – half yearly accounts for mining exploration and oil and gas exploration entities (June year-end).
  • Friday 31 March – full year audited accounts (December year-end).
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