Welcome to Edition 80 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.


ASIC publishes recommendations for improving ASX’s technology and operational risk management arrangements. On 12 September 2018, ASIC published its findings following a (non-incident driven) review – conducted in conjunction with KPMG and the Reserve Bank of Australia (RBA) – of the ASX’s technology and operational risk management arrangements. The Report makes a number of recommendations, having found that certain ASX practices lagged behind those of other global exchanges, for better meeting the expectations of its customers, its regulators and the wider users of the Australian financial market. ASX has already initiated a process for implementing the Report’s recommendations (notably, under the supervision of ASIC and the RBA) and anticipates making significant headway by the end of 2018, with full implementation being achieved within three years.  Boards and senior management of financial sector organisations are encouraged to critically review their own technology governance and operational risk controls and to evaluate this Report’s findings and recommendations in the context of their own business. 

Poseidon Nickel Limited – ASIC Panel Application. Directors involved in capital raising by smaller companies should note the continued uncertainty regarding the application of the right issues underwriting exemption to the takeovers provisions, despite recently revised Takeovers Panel guidance on the subject in the form of new Guidance Note 17. The most recent manifestation of this uncertainty is the application to the Panel by ASIC in relation to the affairs of Poseidon Nickel Limited. The application relates to Poseidon’s announcement on 24 August 2018 of a 5.8m placement and renounceable entitlement offer of 11 shares for every 10 shares at $0.05 per share to raise approximately $68.8 million. The entitlement offer is fully sub-underwritten by Squadron Resources, which participated in the placement and subsequently increased its relevant interest in Poseidon shares from 12.3% to 18.01%. Squadron has committed to take up all of its entitlement in the entitlement offer. The prospectus discloses that Squadron could potentially increase its voting power in Poseidon up to a maximum of 60.96% under the entitlement offer and sub-underwriting arrangements. ASIC is contending that the control effect of the entitlement offer exceeds what is reasonably necessary for the fundraising purpose and is seeking orders that Poseidon not issue Poseidon shares to Squadron as sub-underwriter where that issue would result in Squadron’s voting power increasing above 20% without first obtaining shareholder approval under item 7 of s 611 of the Corporations Act 2001.

ASIC commences proceedings against ANZ for alleged continuous disclosure breach. Last week, ASIC commenced proceedings against ANZ in the Federal Court alleging that ANZ breached its continuous disclosure obligations in relation to a $2.5 billion institutional placement in 2015 by not notifying ASX that approximately $791 million worth of the ANZ shares was to be acquired by the underwriters rather than placed with investors. This is yet another example this year of an increasingly interventionist approach by ASIC, with acceleration and expansion of supervisory and enforcement activities flagged as a key priority in ASIC’s Corporate Plan 2018-22 released earlier this month.

ACCC releases guidelines on misuse of market power. On 31 August 2018, the Australian Competition and Consumer Commission (ACCC) published Misuse of Market Power Guidelines on how it will interpret and enforce the new concerted practices prohibition and the expanded misuse of market power prohibition, which came into effect in November 2017 as part of the Harper reforms to the Competition and Consumer Act 2010 (Cth). These Guidelines replace the “interim guidelines” issued by the ACCC in October 2017, albeit with no material change. See G+T Insight article ACCC releases guidelines on misuse of market power, concerted practices and non-merger authorisations for more information. 


Another Royal Commission. The aged care sector is the latest to face the prospect of a "bruising" inquisition following the weekend’s announcement by Prime Minister Scott Morrison of another Royal Commission. The inquiry is likely to extend to both for-profit and not-for-profit providers, both large and small. Further details are expected to be provided in the coming weeks. The Royal Commission follows what the new Prime Minister considered to be “disturbing” evidence of non-compliance and abuses in the sector.

Announcement of declared dividends or distributions by next Monday. Listed entities must announce any declared dividends or distributions for the period ending 30 September 2018 using the ASX Online form by 24 September 2018.

AGM season. For companies with a 30 June year end, AGMs will need to be held by 30 November. Companies are reminded that draft Notices of Meeting must be submitted to ASX for review and new voting exclusions apply (such that excluded persons are only precluded from voting in favour of a resolution).