Welcome to the latest update from Gilbert + Tobin's Corporate Advisory team. The update provides a summary of key recent legal developments, particularly relevant to in-house counsel.
In this issue, you will find:
A round up of key relevant legislation, enacted or proposed, over the last month including:
- New ASIC industry funding model effective from 1 July 2017
- The latest on the crowd-sourced funding regime
- New Bill to include email address in members register
- Reform of the regulation of financial benchmarks
- Director safe harbour and ipso facto insolvency reforms before the Senate
- NSW duty amendments receive Assent
Following extensive stakeholder consultation, the following 3 new Acts implement a new industry funding model to recover the regulatory costs of the ASIC through annual levies and fees-for-service payable by entities regulated by ASIC, effective from 1 July 2017:
- ASIC Supervisory Cost Recovery Levy Act 2017 (Cth);
- ASIC Supervisory Cost Recovery Levy (Collection) Act 2017 (Cth); and
- ASIC Supervisory Cost Recovery Levy (Consequential Amendments) Act 2017 (Cth).
For further details, see:
- our March 2017 Corporate Advisory Update which summarises how the industry funding model will operate; and
- our April 2017 Corporate Advisory Update for a summary of the draft Regulations that provide additional detail on the operation of the industry funding model (and the calculation of fees payable by each class of regulated entity).
Final Regulations will be released shortly.
The new Corporations Amendment (Crowd-sourced Funding) Regulations 2017 make changes to the Corporations Regulations 2001 (Cth) to give effect to the new crowd-sourced funding (CSF) regime which is set to commence on 29 September 2017.
In summary, the Regulations prescribe:
- the classes of securities that may be offered under the CSF regime;
- the minimum content requirements for the offer document that must be prepared for each CSF offer;
- the content requirements of the general CSF risk warning and retail investor risk acknowledgement;
- the checks that a CSF intermediary must conduct in relation to each CSF offer and what constitutes a reasonable standard in relation to checks; and
- when conduct of a company or CSF intermediary relating to a CSF offer will not constitute providing financial product advice.
See also the explanatory statement.
ASIC has also released the following 2 consultation papers which propose guidance for public companies and intermediaries (i.e. crowd funding platform operators) to assist them in using the CSF regime:
- CP 288 Crowd-sourced funding: Guide for public companies, which aims to assist companies seeking to raise funds through CSF to navigate the new regime and to understand and comply with their obligations, particularly given many of these companies will not have experience in making public offers of their shares; and
- CP 289 Crowd-sourced funding: Guide for intermediaries, which aims to assist intermediaries seeking to provide a crowd-funding service, particularly given this is a new type of financial service and there are unique gatekeeper obligations for intermediaries operating platforms for CSF offers.
Submission on the Consultation Papers are due by 3 August 2017.
See also ASIC’s media release dated 22 June 2017.
For further details on the CSF regime, see:
- see Crowd-sourced Equity Funding dated 19 November 2016 by Peter Reeves and Georgina Willcock;
- The wisdom of Crowd-sourced Equity Funding by Deborah Johns and Peter Reeves dated 30 March 2017; and
- Two’s company: Proprietary Companies to Access Crowd-sourced Equity Funding Regime by Peter Reeves, Deborah Johns, Georgina Willcock and Jack Coles dated 11 May 2017.
This Corporations Amendment (Modernisation of Members Registration) Bill 2017, a Private Members Bill which was introduced into the Senate by Senator Xenophon on 15 June 2017, proposes to amend section 169(1)(a) the Corporations Act 2001 (Cth) to include an email address in the information that must be contained in a register of members.
According to the explanatory memorandum, the inclusion of a member’s email address takes into account that most communication between companies and members is via email, and brings the provision into line with modern communication methods.
The Bill has been referred to the Senate Economics Legislation Committee and is due for report on 11 September 2017.
Following the Government’s announcement in October last year that it would strengthen financial regulation to better protect Australians from the possible abuse and manipulation of financial benchmarks, Treasury has released the following exposure draft legislation:
- Corporations Amendment (Financial Benchmarks) Bill 2017; and
- ASIC Supervisory Cost Recovery Levy Amendment Bill 2017,
together with explanatory materials.
The proposed Bills establish the overarching framework for the regulatory regime which is proposed to commence from 1 January 2018 and will require administrators of 'significant' benchmarks (which are to be determined by ASIC subject to a number of specified criteria) to obtain a 'benchmark administrator' license and comply with a number of new regulatory requirements.
The Government and ASIC will continue to consult on the regulatory regime, with this detail to be included in subsequent draft ASIC rules.
Submissions are due by Monday 24 July 2017.
See ASIC media release dated 26 June 2017.
The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Bill 2017 was passed by the House of Representatives on 22 June 2017 and has had a second reading moved in the Senate.
- amends the Corporations Act 2001 (Cth) (Corporations Act) to create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency. (If passed, these amendments will take effect from the date of Royal Assent); and
- amends the Corporations Act and the Payment Systems and Netting Act 1998 (Cth) to make certain ‘ipso facto’ rights (i.e. rights which allow one party to terminate or modify the operation of a contract upon the occurrence of some specific event, regardless of otherwise continued performance of the counterparty) unenforceable while a company is restructuring under certain formal insolvency processes. (If passed, these amendments will take effect from a date set by Proclamation, or the later of 1 July 2018 and the day after 6 months from the date of Royal Assent).
The State Revenue and Other Legislation Amendment (Budget Measures) Bill 2017 (NSW) (Bill) passed through NSW Parliament on 22 June 2017 and is received Assent on 27 June 2017. According to the explanatory note, the Bill aims to amend state revenue and other legislation in connection with the State Budget for the 2017/18 financial year.
Specifically, the Billamends the Duties Act 1997 (NSW) to, among other things:
- make further provision with respect to duty charged on certain residential land transactions involving foreign persons (including to increase the rate of surcharge purchaser duty payable on those transactions from 4% to 8% and provide for an exemption from, or refund of, surcharge purchaser duty in certain circumstances); and
- abolish duty on lenders’ mortgage insurance, crop insurance and livestock insurance, and to abolish duty for small businesses on commercial vehicle insurance, commercial aviation insurance and occupational indemnity insurance.