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 Treasury’s review of the Franchising Code of Conduct, the ACSI’s annual report indicating that nearly 70% of ASX200 companies are prepared for mandatory climate disclosure and the ACCC’s guidelines on the new Gas Market Code. We also discuss the full Federal Court’s dismissal of ASIC’s appeal in relation to an alleged breach of conflicted remuneration laws and a Federal Court judgment casting doubt over reforms to streamline the evidentiary and procedural requirements for schemes of arrangement. We also discuss an application to the Takeovers Panel in relation to the affairs of Bullseye Mining Limited.
In Over the Horizon, we examine the Australian Labor Party’s motion to review corporate tax arrangements by increasing aggregate tax revenue, despite a push for tax reform aimed at increasing Australia’s productivity by lowering corporate and other tax rates.
GOVERNANCE + REGULATION
Treasury announces franchising review. On 15 August 2023, the Commonwealth Government announced a review of the Franchising Code of Conduct (Code). This review will consider, amongst other things, whether the Code remains fit for purpose, the role of the Code in regulating the automotive sector, the role of regulators in supporting enforcement and dispute resolution under the Code, and the effectiveness of recent franchising reforms. This review will be informed by stakeholder consultations, with a consultation paper being released in due course. Directors of companies involved in franchising should monitor the progress of this review. See Treasury webpage.
ACSI publishes annual report on climate disclosures in the ASX200. On 10 August 2023, the Australian Council of Superannuation Investors (ACSI) released its annual report into the climate change disclosure of ASX200 companies (Report). The Report found that most ASX200 companies are prepared for mandatory climate reporting under the international climate disclosure standards developed by the International Sustainability Standards Board (ISSB). Specifically, the Report highlighted that nearly 70% of ASX200 companies are currently reporting against the Taskforce for Climate-related Financial Disclosures (TCFD) framework, which “provide[s] investors with decision-useful, comparable and consistent information”. By comparison, less than 11% of ASX200 companies were reporting against the TCFD framework in 2017. See ACSI media release. See ACSI report.
ACCC releases guidelines on the new Gas Market Code. On 15 August 2023, the Australian Competition and Consumer Commission (ACCC) published compliance and enforcement guidelines on the new Gas Market Code (Code) (Guidelines). The new Code commenced in July 2023 with a two-month transition period and is set to be enforced from mid-September 2023 (see G+T Knowledge article). The Code applies to east coast and Northern Territory gas producers and their affiliates that sell gas to wholesale customers and the ACCC is responsible for monitoring and enforcing compliance with the Code. The Guidelines provide further clarification on the price capping, process and transparency obligations and exemptions framework for gas producers under the Code. ACCC Commissioner Ms Anna Brakey stated that the Guidelines will “help the gas industry to understand their compliance obligations under these new laws, before the transition period ends”. See Guidelines. See ACCC media release.
Full Federal Court clarifies conflicted remuneration provisions. On 17 August 2023, the Australian Securities and Investments Commission (ASIC) announced that the Full Court of Federal Court of Australia had dismissed ASIC’s appeal against an earlier decision to dismiss its action against the Commonwealth Bank of Australia (CBA) and its wholly owned subsidiary, Colonial First State Investments Limited (Colonial) over alleged breaches of conflicted remunerations laws. ASIC had alleged that CBA and Colonial breached conflicted remuneration laws under sections 963E and 963K of the Corporations Act 2001 (Cth) when Colonial paid CBA to distribute its Essential Super product to retail clients through CBA’s branch. Essential Super was distributed to over 390,000 individuals. ASIC Deputy Chair Ms Sarah Court stated that ASIC pursued the matter because “conflicted remuneration has the potential to cause consumers to be given financial product advice that may not suit their needs”. Although the Full Court dismissed ASIC’s appeal, it clarified the meaning and reach of the conflicted remuneration provisions. See ASIC media release.
Federal Court judgment casts doubt over revised scheme requirements. On 18 August 2023, a judgment delivered by Perram J in the Federal Court (NSW Registry) in Tesserent Limited (First Scheme Hearing)  FCA 969 cast doubt over the proposed reforms to the procedural and evidentiary requirements for schemes of arrangement in the Federal Court expounded by Jackman J in Re Vita Group Ltd  FCA 623 (Re Vita) (see previous edition of Boardroom Brief). Justice Perram confined Re Vita to its factual circumstances, highlighting instances where the procedural requirements Jackman J dispensed with for being “unnecessary” and “onerous” in Re Vita, were in fact necessary under different circumstances. Justice Perram agreed with the motivations behind Justice Jackman’s proposed reforms in Re Vita, but doubted that a “one size fits all” approach was appropriate for schemes of arrangement. This judgment means there can be no certainty that other Federal Court judges will follow Re Vita and a return to more fulsome evidence for schemes of arrangement is likely. See Tesserent Limited (First Scheme Hearing)  FCA 969.
Takeovers Panel receives application in relation to the affairs of Bullseye Mining Limited. On 21 August 2023, the Takeovers Panel (Panel) announced that it received an application in relation to the affairs of Bullseye Mining Limited (Bullseye). Bullseye is an unlisted public company with over 50 shareholders that is currently the subject of an off-market takeover bid by Emerald Resources NL (Emerald). The applicant, being Bullseye’s fourth largest shareholder, submits, among other things, that certain directors and certain companies (including Bullseye and Emerald) are associated and have an aggregate voting power over 75%, that Emerald (through its control of Bullseye) has given two of those companies a collateral benefit through the settlement of litigation, and that Emerald’s bidder’s statement contains various deficiencies. The Panel noted that it has considered several previous applications in relation to Bullseye, including in relation to a previous off-market takeover bid by Emerald. No decision has been made whether to conduct proceedings. See Takeovers Panel media release.
OVER THE HORIZON
ALP National Conference passes motion to review corporate tax arrangements. Last week, the Australian Labor Party (ALP) held its 49th National Conference, with the party’s highest decision-making forum debating and passing several motions on various matters of national significance. One such matter was corporate tax reform. Specifically, the National Conference passed a motion to “increase government investment in social and affordable housing with funding from a progressive and sustainable tax system, including corporate tax reform”. The motion passed last week is a watered-down version of a motion proposed by the ALP’s left faction that would have called for a 40% “super profits tax” on companies with an annual turnover of more than $100 million. Measures such as these stand at odds with recent calls from business (including the Australian Industry Group) for tax reform aimed at increasing Australia’s productivity by lowering corporate and other tax rates (see media article). It remains to be seen whether the Albanese Government will have an appetite for corporate tax during its first term. See media article.