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 the Commonwealth’s new Net Zero Economy Agency which will support the economic transformation behind decarbonisation and energy system change and APRA’s new standards and guidance on recovery and exit plans for responding to financial crises. We also discuss the ACCC’s new National Anti-Scam Centre to combat scam activities. We consider the Takeovers Panel’s interim orders in relation to the affairs of A S P Aluminium Holdings Pty Ltd and the Panel’s declaration of unacceptable circumstances in relation to the affairs of The Market Herald Limited.
In Risk Radar, we discuss a new investor voting policy set to influence the election and re-election of male board members in companies which fail to comply with gender diversity targets.
GOVERNANCE & REGULATION
Commonwealth Government moves to establish a Net Zero Economy Agency. On 11 May 2023, the Commonwealth Government announced that it has made an executive order establishing an interim Net Zero Economy Agency (Agency) to advise on the formation and commencement of the projected Net Zero Authority (Order). The Agency aims to promote the orderly and positive economic transformation associated with decarbonisation and energy system change, including through the development of government strategies to support the net zero economic transformation for workers and regional communities and facilitating engagement between investors and regional industries and communities in the net zero transformation. See Order.
APRA finalises new standards and guidance aimed at strengthening recovery and resolution planning. On 18 May 2023, the Australian Prudential Regulation Authority (APRA) announced that it has published Prudential Practice Guide CPG 190 Recovery and Exit Planning which accompanies Prudential Standard CPS 190 Recovery and Exit Planning (CPS 190), which aim to strengthen the preparedness of APRA-regulated entities to respond to financial crises. The standard and guidance requires APRA-regulated entities to have recovery and exit plans for responding to severe financial stress. APRA has also finalised Prudential Standard CPS 900 Resolution Planning (CPS 900) and its associated Prudential Practice Guide CPG 900 Resolution Planning. CPS 900 requires large or complex APRA-regulated entities to support APRA in “bespoke planning and pre-positioning to ensure that, in the event of failure, they can be resolved in an orderly manner”. See APRA media release.
ACCC given $58 million of Commonwealth funding to establish a National Anti-Scam Centre. Australian consumers continue to fall victim to a worrying number of scams. On 15 May 2023, the Australian Competition and Consumer Commission (ACCC) announced that it supports the receipt of Commonwealth funding to establish a new National Anti-Scam Centre (NASC). The NASC – which will be established by the ACCC – will support high frequency data sharing between government agencies, law enforcement and the private sector in order to combat scam activities. ACCC Deputy Chair, Catriona Lowe, stated that the NASC “will help inform finance, telecommunications and digital platforms sectors to take more timely and effective steps to stop scammers”. Ms Lowe also reiterated the ACCC’s policy position that there should be “effective cross-industry standards with coverage and teeth”. The NASC will be phased in from 1 July 2023 with funding allocated to build its capabilities over the next three years. See ACCC media release.
Takeovers Panel makes interim orders in relation to the affairs of ASP. On 15 May 2023, the Takeovers Panel (Panel) made interim orders in response to an application by Villefranche Investments Pty Limited (as trustee of the Gates Family Trust) in relation to the affairs of A S P Aluminium Holdings Pty Ltd (ASP) (see previous edition of Boardroom Brief). The interim orders prohibit certain named persons from acquiring any shares in ASP without the Panel’s consent and prevent ASP from registering any transfer of shares in ASP. ASP must also communicate the effect of these orders to all ASP shareholders. These interim orders will operate until the earlier of the determination of proceedings, a further order of the Panel or two months from the date of the orders. See Takeovers Panel media release.
Takeovers Panel makes a declaration of unacceptable circumstances in relation to the affairs of The Market Herald Limited. On 19 May 2023, the Panel made a declaration of unacceptable circumstances in relation to an application by UIL Limited in relation to the affairs of The Market Herald Limited (TMH) (see previous edition of Boardroom Brief). The Panel found deficiencies in TMH’s disclosure during two entitlement offers of an association between a TMH non-executive director (TMH Director) and his father, who was a substantial shareholder of TMH. The Panel found two further associations of the TMH Director: first, in an entitlement offer where the TMH Director’s employees were sub-underwriters and subsequently sold their acquired interest in TMH straight to the TMH Director and his father; and second, with the non-Executive Chairman in relation to the composition of TMH’s board. The Panel concluded that there was insufficient material to establish whether any of these associations had ended and that the aggregated control effect of these associations was not adequately disclosed to TMH shareholders. See Panel media release.
New ACSI voting policy regarding gender diversity on boards puts male directors in the firing line. On 17 May 2023, the Australian Council of Superannuation Investors (ACSI) – which represents asset owners and investors managing over $1 trillion in funds under management – released a new voting policy “aimed at promoting gender balance in Australia’s listed company boardrooms”. Under the new voting policy, where an ASX300 board has less than 30% female representation, ACSI will consider recommending a vote against (in descending order of importance) male Chairs of the board, male Chairs or members of the Nominations Committee, and / or another male director seeking re-election. This will replace ACSI’s current voting policy, under which ACSI would consider making such voting recommendations with respect to ASX200 companies that have fewer than two female directors. This move comes weeks after the Commonwealth Government introduced a Bill to Parliament that, if passed, would require companies to report the gender composition of governing bodies (including boards) (see previous edition of Boardroom Brief). Directors should be cognisant of the growing pressures from investors and government to ensure adequate gender representation on boards. The new ACSI voting policy takes effect from July 2023. See ACSI media release. See also news article.