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 key takeaways from the ASIC Chair’s speech to the AFR ESG Summit, an increase in FIRB monetary thresholds for UK private investors and takeaways from an APRA and ASIC-held Superannuation CEO Roundtable.  We also discuss Treasury and APRA’s statement of expectations and statement of intent regarding APRA’s operations, a Federal Court declaration that Dell Australia misled consumers and the Takeovers Panel’s final orders in relation to the affairs of The Market Herald Limited.

In Risk Radar, we discuss the Treasury’s wide-ranging strategic plan for Australia’s payments system.

GOVERNANCE & REGULATION

ASIC Chair speech highlights focus on effective climate disclosure.  On 5 June 2023, Australian Securities and Investments Commission (ASIC) Chair Mr Joe Longo delivered a speech to the AFR Environmental, Social and Governance (ESG) Summit, which focused primarily on good governance in relation to climate reporting.  Mr Longo noted that the International Sustainability Standards Board is expected to finalise and issue its first two disclosure standards by the end of June 2023, which the Commonwealth Government is expected to largely incorporate into domestic reporting disclosure requirements (see G+T Knowledge article).  Mr Longo addressed the problematic behaviours identified by ASIC relating to greenwashing, such as misleading net zero statements, unsubstantiated use of terms like "carbon neutral" or "green", and inconsistencies in sustainability-related investment screens, warning companies against “greenhushing” (withholding ESG policy goals due to potential regulatory action) as simply another form of greenwashing.  See full speech transcript.

FIRB monetary threshold increases for UK private investors.  The Australia-United Kingdom Free Trade Agreement came into force on 31 May 2023.  Consequently, on 5 June 2023, the Foreign Investment Review Board (FIRB) announced that private investors from the United Kingdom (UK) are now subject to higher monetary screening thresholds for certain investments.  See FIRB announcement.

APRA and ASIC release notes on Superannuation CEO Roundtable.  On 9 June 2023, the Australian Prudential Regulation Authority (APRA) and ASIC held their fourth Superannuation CEO Roundtable which focused on cyber resilience.  The regulators shared lessons learned from recent cyber-attacks, highlighting (among other things) the importance of cyber threat and response simulations to ensure organisational preparedness, and the need for strong data governance.  The CEOs also discussed practices to enhance cyber resilience, including data management plan reviews, enhancing board and internal stakeholder cyber capabilities, and testing response plans to material cyber incidents.  Both the regulators and CEOs noted the benefit of establishing a cross-industry forum to discuss cyber risks and incidents.  See ASIC media release.

Treasury and APRA publish statement of expectations and statement of intent.  On 7 June 2023, Treasury and APRA released an updated statement of expectations and a statement of intent, respectively, regarding how APRA should carry out its regulatory responsibilities.  APRA’s statement of intent outlines how APRA “will manage its relationship with the [Commonwealth] Government, other regulatory agencies and industry”.  Notably, for the first time, the Commonwealth has explicitly required APRA to consider climate-related risks as part of its operations.  This includes the adoption of climate reporting standards by regulated entities and the promotion of transparency and prudent practices concerning climate-related financial risks.  See statement of expectations and statement of intent.

LEGAL

Federal Court declares Dell Australia misled consumers.  On 6 June 2023, the Australian Competition and Consumer Commission (ACCC) announced that the Federal Court of Australia (Court) declared by consent that Dell Australia Pty Ltd (Dell Australia) had made false and misleading representations on its website regarding the pricing of various monitors.  Dell Australia made representations that consumers could purchase discounted monitors by bundling them with other products.  However, consumers were often not receiving discounts, and in some cases were paying a higher price compared to buying the monitors separately.  The Court ordered Dell Australia to offer refunds to affected consumers, issue corrective notices to all online purchasers of the monitors during the relevant period and appoint an independent compliance professional to review Dell Australia’s compliance program.  The Court will hear submissions on penalties and costs from the parties.  This case serves as a reminder to directors of the importance of implementing and maintaining effective internal compliance programs.  See ACCC media release.

Takeovers Panel makes final orders in relation to the affairs of The Market Herald Limited.  On 8 June 2023, the Takeovers Panel (Panel) issued final orders in response to UIL Limited's application regarding The Market Herald Limited (TMH).  The Panel previously made a declaration of unacceptable circumstances in relation to the affairs of the TMH (see previous edition of Boardroom Brief), finding that the aggregate control effect of associations between a TMH non-executive director (TMH director) and several other interested parties was not adequately disclosed to shareholders.  The Panel ordered (among other things) that the shares in TMH held by the impugned TMH director be sold by ASIC, that the situation and the Panel’s decision be adequately disclosed to TMH shareholders and that TMH appoint at least two independent directors to the board of TMH, one of which as the chair.  This aspect of the final order represents a new and novel exercise of the Panel’s broad powers under the Corporations Act 2001 (Cth), illustrating that, where necessary to address “unacceptable circumstances”, the Panel is prepared to make orders affecting the composition of a company’s board.  See Takeovers Panel TP23/23.  Of note, the Panel made a number of ancillary orders to give practical effect to its orders to appoint additional Board members, including the engagement of a recruitment consultant and regular reporting back to the Panel on progress.  This evidences a willingness on the part of the Panel to adopt a “supervisory” role to its orders which may continue for some time.

RISK RADAR

Treasury releases transformative strategic plan for Australia’s payments system.  On 7 June 2023, the Treasury released a comprehensive strategic plan for Australia’s payments system (Strategic Plan) after consultation with industry, regulators, consumer representatives and business representatives.  The Strategic Plan outlines the Commonwealth Government’s policy objectives and priorities to achieve a “modern, world-class and efficient payments system that is safe, trusted and accessible, and enables greater competition, innovation and productivity across the economy”.  The Strategic Plan focuses on five key priority areas, each with several supporting initiatives.  Notable initiatives include the phasing out of cheques by 2030, consideration of an Australian central bank digital currency, industry migration to the Advanced Encryption Standard by 2025, and the promotion of adopting artificial intelligence (AI) in the financial sector.  To ensure relevance and adaptability, the Strategic Plan will undergo a review every 18 months to track progress and address emerging challenges and opportunities.  Directors should be mindful of the proposed initiatives and encourage their organisations to embrace technological advancements and explore opportunities to leverage AI and enhanced encryption standards in their financial operations.  See Treasury webpage.