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.

A short week this week due to the King’s Birthday holiday in Western Australia. 

In this edition, we discuss ASX’s recent compliance update, which includes requirements for listed companies’ Nominated ASX Contact.  We also review the case of ASIC v AMP, which has resulted in AMP being ordered to pay $14.5 million for charging for services that were not provided.  Further, we look at the Federal Court’s comments on losses incurred from cyber attacks in Inchcape v Chubb, and another Federal Court case which has seen Dixon Advisory ordered to pay $7.2 million for failing to act in their clients’ best interests.

In Over the Horizon, we remind readers of the looming changes to the Corporations Act 2001 (Cth) (Corporations Act) in relation to offers made by unlisted entities under employee share schemes (ESS).


ASX publishes Compliance Update No. 08/22 which includes a number of updates for listed entities.  Among other things, ASX’s 16 September 2022 update reminds ASX listed entities that they must appoint and at all times have at least one person responsible for communication with ASX in relation to listing rule matters (Nominated ASX Contact). The Nominated ASX Contact must complete an ASX Listing Rules compliance course examination by 14 October.  However, a Nominated ASX Contact whose ‘Start Date’ was prior to 1 July 2022 is not required to complete the course.  See ASX PDF update here.


AMP companies fined $14.5 million for fees for no service.  The Federal Court has ordered five companies that are or were part of the AMP Limited group (together, AMP) to pay a total of $14.5 million in penalties for charging fees for services that were not provided to 1,452 superannuation members.  These members had been paying fees in return for access to general financial advice as part of an agreement between their employer and AMP.  On leaving their employer, the members continued to be automatically charged fees, despite no longer having access to the advice services for which they were being charged.  In imposing the $14.5 million penalty, Justice Mochinsky found that ‘the contraventions of [the Australian Services and Investments Commission Act 2001 (Cth)] in the present case were extremely serious.  They involved a large number of contraventions, affected a significant number of members, involved the wrongful deduction of a substantial sum of money, and continued for a long period of time’.  The penalties submitted by the parties were considered to be inadequate.  See ASIC v AMP Financial Planning Proprietary Limited [2022] FCA 1115.  See also ASIC media release.

Scope of cover for cyber-related financial loss and the construction of the insurance policy's "directness" requirement for first-party losses.  In August 2022, the Federal Court handed down judgment in the case of Inchcape Australia Limited v Chubb Insurance Australia Limited, which concerned a ransomware attack on Inchcape’s systems resulting in significant losses, including the costs of conducting an investigation of the incident, replacing hardware, restoring software, reconstructing data, and arranging additional staff to manually process orders.  Inchcape was insured by Chubb, for which it claimed indemnity for its losses under its Financial Institutions Electronic and Computer Crime Policy (Policy).  The Federal Court found that under the insurance policy, the limitation of coverage to ‘direct financial loss resulting directly from ‘an insured event meant the Policy only covered a portion of Inchcape’s costs of recovering from the incident.  For Directors, the Federal Court’s decision evidences the importance of considering the precise wording a policy taken out by a business and whether a cyber insurance policy will sufficiently cover an insured for potential losses.  See Inchcape Australia Limited v Chubb Insurance Australia Limited [2022] FCA 883. As the recent Optus data breach shows, these issues are of critical importance in terms of Directors’ risk management and oversight obligations.

Dixon Advisory penalised $7.2 million for breaches of best interest obligations.  The Federal Court has ordered a $7.2 million penalty against Dixon Advisory and Superannuation Services Limited (Dixon Advisory) after six of its representatives failed to act in their clients’ best interests and failed to provide advice appropriate to their clients’ circumstances.  The contravening conduct involved 53 occasions between October 2015 and May 2019, where Dixon Advisory was the licensee responsible for six representatives who did not act in the best interests of eight clients when they advised these clients to acquire, roll-over or retain interests in a certain residential property fund (and its related products).  The Federal Court observed that Dixon Advisory representatives did not conduct a reasonable investigation of the clients’ circumstances before providing such advice. In some cases, the inappropriate advice resulted in the client’s self-managed superannuation fund being insufficiently diversified and exposed to risk of capital loss.  See case Australian Securities and Investments Commission v Dixon Advisory & Superannuation Services Ltd [2022] FCA 1105.  See also ASIC media release.


Are you ready for the impending changes to offers made under an ESS?  Recent changes to the Corporations Act aim to streamline the process of incentivising employees with equity in a listed or an unlisted entity, particularly where monetary consideration from potential participants to participate in the ESS is not required.  The reforms, which commence on 1 October 2022, will be of particular interest to start ups and other ‘cash poor’ businesses looking to be more competitive in recruitment and retaining staff. The changes remove certain Class Order 14/1000 requirements, expand the classes of eligible participants to include service providers, and (where the offer for ESS interests is for no monetary consideration) remove the issue cap and lighten the burden of disclosure requirements.  However, if an eligible ESS does require monetary consideration, the offer to eligible participants will need to comply with an issue cap (which may be varied in the company’s constitution) and comply with certain disclosure requirements. Given the legislative amendments currently do not contemplate relief from the on-sale provisions (in contrast to the existing Class Order 14/1000), boards should take care to revisit their ESS and obtain legal advice to ensure it is compliant with the new law. For more, see our April 2022 Corporate Advisory Update.

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