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.

In this edition, we discuss ASX’s latest compliance update and ASIC’s consideration of submissions on modifications to the new employee share scheme regime, the sentencing of a former Tesla Motors Australia director for insider trading and Treasury’s consultation on proposed reforms concerning corporate disclosure of subsidiary information.  We also note the Federal Court’s recent decision on the Essential Metals scheme of arrangement, commenting on the necessity of court approval of shareholder campaign call scripts and proposed reforms streamlining the process for schemes of arrangement in the Federal Court. 

In Over the Horizon, we look at draft legislation to facilitate competitive outcomes in the provision of clearing and settlement services for Australia’s financial markets. 


ASX issues compliance update, reminding listed entities that it strictly enforces deadlines for lodgement of periodic reports.  On 22 March 2023, ASX issued a reminder to listed entities that failure to comply with lodgement deadlines will result in automatic suspension.  Periodic reports must be lodged before the Market Announcements Office closes on the day the relevant report is due.  Failure to meet this deadline will result in the entity’s securities being suspended from trading the following trading day.  Annual financial reports, including audited financial statements, must be given to ASX (in addition to lodging with ASIC) no later than three months after the end of the relevant accounting period.  See ASX Compliance Update.

ASIC responds to consultation on modification to employee share scheme regime and determines foreign financial markets.  On 21 March 2023, ASIC released its report considering submissions on its modifications to the employee share scheme (ESS) provisions in Div 1A of Pt 7.12 of the Corporations Act 2001 (Cth).  ASIC noted that the submissions generally supported the proposed modifications, although there were arguments in favour of broader relief.  Some submissions requested further guidance on the operation of the ESS provisions and ASIC expressed support for a “common sense approach” to provisions intending to facilitate the offer of ESS interests without compromising consumer protection.  See ASIC report

Former Tesla Motors Australia director sentenced for insider trading.  On 17 March 2023, a former Tesla Motors Australia director was sentenced to two years and six months imprisonment, having earlier entered guilty pleas to two insider trading offences.  Through their directorship, the director became aware of a confidential, in-principle agreement to be entered into by Tesla Inc (in the US) with ASX-listed Piedmont Lithium Ltd (Piedmont) relating to the supply of lithium.  The director proceeded to purchase shares in Piedmont and communicated this inside information to a friend in circumstances where it was likely that the friend would also acquire shares in Piedmont.  Shortly after the announcement was made public, the director sold the shares for a realised profit of $28,883.53.  An order was made by consent for the director to forfeit this profit to the Commonwealth Government.  The director is also automatically disqualified from managing corporations for five years as a consequence of their conviction.  ASIC Deputy Chair, Sarah Court, stated, “[t]his criminal outcome demonstrates the serious consequences for trading when in possession of inside information.”  See ASIC media release.

Department of Treasury announces consultation on proposed reforms concerning corporate disclosure of subsidiary information.  On 16 March 2023, the Department of Treasury (Treasury) announced a consultation on exposure draft legislation, the Treasury Laws Amendment (Measures for Future Bills) Bill 2023: Financial reporting by public companies (Proposed Bill).  If passed, the Proposed Bill would require Australian public companies (both listed and unlisted) to disclose information on the number of its subsidiaries and each subsidiary’s country of tax domicile.  Treasury stated that the new measures – announced as part of the October 2022–23 budget – aim to “increase transparency and strengthen public scrutiny over disclosures made by public companies”, bringing Australia in line with international standards on tax transparency.  If passed, the Proposed Bill would apply to financial reports for financial years commencing on, or after, 1 July 2023.  Stakeholders have until 13 April 2023 to provide submissions on the Proposed Bill.  See Treasury’s webpage.


Federal Court comments on the necessity of court approval of shareholder campaign call scripts.  On 21 March 2023, Justice Banks-Smith of the Federal Court gave reasons in Re Essential Metals Limited [2023] FCA 240 (Essential Metals).  Recent case law dealing with shareholder engagement campaigns has suggested that scheme proponents should obtain court approval before undertaking such campaigns.  However, Banks-Smith J provides a different view in the Essential Metals case, suggesting that court approval is only necessary where information in the proposed communication is substantial and is not contained in the scheme booklet.  Where the information contained in shareholder communications outside the scheme booklet is substantive and deviates from the scheme booklet, scheme proponents should seek court approval, however, this is not intended to cover all communications with shareholders outside the scheme booklet.  Justice Banks-Smith inferred that often it will be sufficient for scheme proponents intending to undertake a shareholder engagement campaign to advise the court at the first hearing and subsequently provide evidence of such communication at the second hearing, avoiding the need for additional court approvals.  See Re Essential Metals Limited [2023] FCA 240.

Federal Court signals reform to its approach to schemes of arrangement.  Still on the topic of schemes of arrangement, at a recent case management hearing in In the matter of Vita Group Limited, Jackman J furnished a new and more streamlined process for schemes of arrangement brought before the Federal Court of Australia (Court).  The new rules substantially reduce the evidentiary burden required to put the scheme through the Court for both the acquirer and the scheme company, cutting the requisite affidavits down to three for the first Court hearing and one for the second Court hearing.  However, Jackman J noted that the streamlined procedure increases the parties’ responsibility to bring important matters or irregularities to the Court’s attention as part of their ex parte disclosure obligations.  This new approach is also subject to the general qualification that additional evidence may be required in certain circumstances, to be assessed on a case-by-case basis by the scheme company and its advisors.  The proposed reforms are discussed further in a G+T Knowledge Article


Proposed shakeup to Australia’s $2.5 trillion equities market – the end of ASX’s monopoly on clearing and settlement?  On 23 March 2023, Treasury released a draft copy of the Financial Sector Reform (Competition in Clearing and Settlement) Bill 2023 which would provide ASIC and the Australian Competition and Consumer Commission (ACCC) new powers over the monopoly provision of clearing and settlement services and competition in clearing and settlement services.  ASIC will be given powers to implement and enforce requirements for ASX to operate in a way that achieves competitive outcomes, and to ensure safe and effective competition in clearing and/or settlement should a competitor provider emerge.  The ACCC will be empowered to make binding arbitration decisions to resolve disputes regarding the terms of access to clearing and settlement services.  The Reserve Bank of Australia would also be able to advise ASIC, the ACCC, and the Treasurer on the application of the new regulatory powers.  These reforms are based on recommendations made by the Council of Financial Regulators in 2015 which were not implemented by the previous Coalition Government.  It is the latest in a raft of financial system reforms championed by the Albanese Government, which is also developing a strategic plan for Australia’s payments system and seeking to regulate Buy Now Pay Later services and crypto service providers.  See Treasury’s webpage

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