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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
Welcome to Edition 50 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.
Legislation passed to establish the Australian Financial Complaints Authority. Last week, the Senate passed the Bill to establish the Australian Financial Complaints Authority (AFCA). The AFCA will provide a one-stop shop for resolving disputes with banks, insurers, super funds and certain credit providers; replacing the existing Financial Ombudsman Service (FOS), Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT). The reform has been broadly well received, including by ASIC (see ASIC’s media release) and the Australian Bankers’ Association. ASIC will work with the Australian Government and scheme stakeholders to ensure that the transition to the commencement of the AFCA is as smooth as possible. In the interim, ASIC will retain direct oversight of the FOS and the CIO, while separate arrangements are in place for the ongoing operation of the SCT. It is expected that the AFCA will begin to receive disputes no later than 1 November 2018.
Toughening the Multinational Anti-Avoidance Law. The Government has released exposure draft legislation and an accompanying explanatory statement to extend the application of the Multinational Anti-Avoidance Law (MAAL) to foreign trusts and partnerships. This new legislation will strengthen the integrity of the MAAL by preventing large multinationals from using foreign trusts and partnerships in corporate structures to avoid the application of the MAAL. This will ensure that the MAAL will continue to operate as intended. Submissions are due by 23 February 2018. See Treasury’s media release.
ASIC reports on credit rating agencies. ASIC has conducted a market-wide surveillance of credit rating agencies (CRAs) and made a number of recommendations for change in its Report 566 Surveillance of credit rating agencies (REP 566). ASIC’s main areas of focus were the CRAs’ governance arrangements (including conflicts of interest and corporate structure), transparency and disclosure. Recommendations for change relate to board reporting, compliance teams and testing, analytical evaluation of ratings and human resources. See ASIC’s media release.
Partnership Tax Treatment. Directors involved with offshore partnership structures, including private equity groups, may need to consider the Federal Court’s recent decision in Resource Capital Fund IV, which shook the Australian private equity market with a dramatic shift from industry practice. The Court found that the correct taxable entity in respect of gains from a sale of shares in an Australian entity was not the limited partnership, but the partners themselves. This is not consistent with the ATO’s position. See the article by Gilbert + Tobin partners Muhunthan Kanagaratnam, Chris Merjane, Tina Chen and Matthew Charman, “Federal Court throws into question tax treatment of limited partnerships”.
Wage Price Index. An important piece of Australian economic data will be released on Wednesday in the form of the December Quarter Wage Price Index. As noted in previous editions of Boardroom Brief, despite evidence of an improvement in the job market and business confidence, wages have remained stubbornly low, which in turn is affecting consumer sentiment: still the major driver of GDP growth.
US news and markets. Monday 19th marks the Presidents Day holiday in the US, which promises a quiet start to the week. But on Wednesday, the FOMC minutes from the 31 January meeting will be released, and may provide further signals to the market about the likely direction of interest rates.