This is a service specifically targeted at the needs of busy non-executive directors (NEDs). 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 discuss guidance released by the Australian Prudential Regulation Authority (APRA) on expectations around data backup procedures, the Federal Court of Australia’s finding that LGSS Pty Limited, as trustee of the superannuation fund Active Super (Active Super), made misleading representations concerning its environmental, social and governance (ESG) credentials, and three Takeovers Panel decisions in relation to the affairs of Metallica Minerals Limited (ASX: MLM) (Metallica), Ringers Western Limited (RWL) and Maronan Metals Limited (ASX: MMA) (Maronan Metals).

In Over the Horizon, we examine the findings from the World Energy Investment 2024 Report published by the International Energy Agency (IEA) in relation to capital flows across the energy sector. 

Regulation

APRA issues letter emphasising the importance of data backups to cyber resilience

On 3 June 2024, APRA released a letter addressed to all APRA-regulated entities emphasising the importance of data backups to cyber resilience. The letter outlines common issues observed by the regulator in data backup practices that could result in data loss or otherwise hinder the restoration of critical systems during or following a significant cyber incident. APRA’s key observations include: (a) an insufficient separation between data production and backup environments; (b) insufficient control testing coverage and rigour to ensure backups are protected from compromise; and (c) insufficient testing of capability to recover systems and data within tolerance levels from backups. APRA expects that these areas are appropriately addressed by regulated entities and that any deficiencies are rectified promptly. See APRA media release and APRA letter.

Legal

Federal Court finds Active Super made misleading ESG claims 

On 5 June 2024, the Federal Court of Australia published the reasons for O’Callaghan J’s decision that Active Super contravened the law in connection with various misleading representations concerning its ESG credentials. Active Super claimed in marketing materials that it eliminated various classes of investments that posed a risk to the environment and the community. However, O’Callaghan found that, from 1 February 2021 to 30 June 2023, Active Super both directly and indirectly invested in various securities that it had claimed were eliminated or restricted by ESG investment screens. His Honour rejected Active Super’s claim that an ordinary or reasonable consumer would draw a distinction between holding shares in a company and indirect exposures through pooled funds. Instead, O’Callaghan J found that the use of terms such as such as “not invest”, “No Way” and “eliminate” was unequivocal, and was not subject to any qualifications in the investment policy for the relevant product. The matter has been listed for a further hearing where the appropriate form of declaratory relief will be considered, and any pecuniary penalty will be considered at a later date. See ASIC v LGSS Pty Ltd [2024] FCA 587 and ASIC media release.

Takeovers Panel declines to make declaration of unacceptable circumstances in relation to the affairs of Metallica

On 5 June 2024, the Panel announced it had declined to make a declaration of unacceptable circumstances in relation to the affairs of Metallica. As discussed in a previous edition of Boardroom Brief, Diatreme Resources Limited (ASX: DRX) (Diatreme), which had made a takeover bid for Metallica, brought the application in circumstances where Metallica had refused to lift a mutual standstill pursuant to a confidentiality deed that Diatreme and Metallica had entered into and had not updated its shareholders about the likelihood of a competing proposal occurring. The Panel decided not to make a declaration of unacceptable circumstances because Metallica had agreed to address the Panel’s concerns by publishing a supplementary target’s statement to alleviate the disclosure issues, and release an amended and restated deed poll to address the definition of “superior proposal” and alleviate the standstill issues See Takeovers Panel media release.

Takeovers Panel makes declaration of unacceptable circumstances in relation to the affairs of Ringers Western Limited, and receives review application

On 6 June 2024, the Takeovers Panel announced that it had made a declaration of unacceptable circumstances and final orders in relation to an application dated 26 April 2024 by various minority shareholders of RWL in relation to the affairs of RWL. As discussed in a previous edition of Boardroom Brief, the application concerned the acquisition of shares in RWL by the Ringers Western Discretionary Trust (RW Trust) pursuant to a bonus share deed which had the effect of increasing RW Trust’s shareholding in RWL from 63.31% to 99.94%. The Panel considered that the RW Trust’s acquisition of the bonus shares did not take place in an efficient, competitive and informed market and had a significant effect on control of RWL, with the interests of minority shareholders in RWL being diluted effectively to nominal percentages, and made orders that the shares acquired by RWL pursuant to the bonus share deed be cancelled. See Takeovers Panel media release. On 7 June 2024, the Panel announced that it had received a review application from the trustees for the RW Trust, and that the President of the Panel made interim orders staying the final orders made by the Panel in its original decision, and maintaining the status quo. A review Panel has not yet been appointed and no decision has been made whether to conduct proceedings. See Takeovers Panel media release. 

Takeovers Panel declines to conduct proceedings in relation to the affairs of Maronan Metals

On 7 June 2024, the Takeovers Panel announced it had declined to conduct proceedings in relation to the affairs of Maronan Metals. As discussed in a previous edition of Boardroom Brief, Benjamin Pauley had brought an application concerning certain trading in Maronan Metals shares prior to its announcement of a placement and share purchase plan. Amongst other things, the Panel considered that there was a lack of a sufficient body of material to justify the Panel making further enquiries for the purposes of determining whether unacceptable circumstances were present. See Takeovers Panel media release.

Over the horizon

Solar energy is leading global decarbonisation efforts

In June 2024, the IEA – made up of 31 member countries – published its World Energy Investment 2024 Report (Report) which revealed the integral role that solar energy investment is playing in global efforts towards decarbonisation. The Report examines how investors are assessing risks and opportunities across all areas of fuel and electricity supply, critical minerals, efficiency, research and development, and energy finance. In doing so, the Report notes that, assisted by policy support (such as the government’s Solar SunShot program announced in March 2024), investment in solar energy has far outstripped investment in all other electricity generating technologies including coal, oil, natural gas, wind, hydro and nuclear energy. The Report warns, however, that there are still major imbalances and shortfalls in energy investment flows across the globe, noting, among other things, the low level of clean energy investment in emerging and developing economies, which could compromise the race towards global decarbonisation. See media release and IEA Report.