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 Queen's Birthday public holiday in Western Australia.
In this Edition, we consider AICD’s Gender Diversity Progress Report which comments on gender participation in the boardroom, ASIC’s report on competition in funds management, ASIC’s Market Integrity update for September 2021 and an application to the Takeovers Panel concerning the competing takeover bids for AusNet. Meanwhile on the Risk Radar, is a warning from ASIC on ‘pump and dump’ campaigns.
GOVERNANCE & REGULATION
AICD publishes Gender Diversity Progress Report: June to August 2021. Last week, the Australian Institute of Company Directors (AICD) published its Gender Diversity Progress Report for the period June to August 2021. The Report revealed that although progress has been made with respect to gender diversity on boards, gender participation rates are far from equal. For example, although there are no all-male ASX 200 boards, in one third of these companies, women represent less than 30% of the board. See AICD’s media release.
ASIC releases report of competition in the Australian funds management industry. ASIC has released Report 702 Competition in funds management on the status of competition in Australia’s funds management industry, reporting some interesting comments on the impact of these funds on economic activity generally. ASIC engaged Deloitte Access Economics to investigate competition between fund managers, focussing on outcomes delivered to investors in retail managed investment products. ASIC’s Report found that only 5% of managed funds are retail investors, however the industry has the potential to affect a much larger percentage of the Australia population through superannuation (which makes up over half of the managed funds industry). Further, retail investors are not engaging with funds management in a meaningful way, given the predominance of intermediaries between fund managers and retail investors (and ASIC notes this structure has the potential to create conflicts of interest, which could affect outcomes for retail investors). ASIC intends to utilise these findings to support effective competition and improve investor outcomes in the funds management space. See ASIC’s media release.
ASIC releases Market Integrity Update for September. ASIC has released its Market Integrity Update for September 2021. ASIC’s update includes information regarding ASIC’s priorities for supervising market intermediaries in 2021-22, being reducing the risk of harm to consumers, supporting enhanced cyber and operational resilience and enhancing market surveillance and data analytics. ASIC’s update also flagged its concern as to the trend of social media posts being used to coordinate ‘pump and dump’ activity (set out in further detail in Over the Horizon below).
Takeovers Panel receives application concerning anti-competitive takeover bid. The Panel has received an application from Australian Pipeline Limited as agent of the Australian Pipeline Trust and APT Investment Trust (APA). The application concerns the competing proposals made by APA and Brookfield for control of AusNet. APA initially approached AusNet with a confidential, non-binding indicative proposal to acquire AusNet by way of scheme of arrangement. Subsequently, Brookfield approached AusNet with a higher bid and the parties entered into a confidentiality deed. APA submitted to the Panel that the confidentiality deed and exclusivity arrangements between Brookfield and AusNet prevent AusNet from responding to APA’s bid and hinders or is likely to hinder the acquisition of control of AusNet occurring in an efficient, competitive and informed market and is likely to deny shareholders the opportunity to participative in the benefits of a competing proposal. APA seeks orders that the exclusivity arrangements be terminated or made subject to a “fiduciary out” clause to allow AusNet to respond to APA’s superior proposal. This application will be considered by the Panel, with its decision made available in due course. See Takeover Panel’s media release.
OVER THE HORIZON
Social media ‘pump and dump’ campaigns on ASIC’s radar. As noted above, ASIC has flagged its concern relating to ‘pump and dump’ schemes (being schemes to coordinate share purchases to increase (pump) the share price before selling (dumping) shares to make a profit) utilising social media. ASIC reminds of the consequences of market manipulation, including significant fines and jail time. Market participants and listed entities should promptly submit suspicious activity reports where they see groups of clients trading in the same stock, in the same direction and around the same time. Directors of listed companies should also ensure that there are procedures in place to monitor social media activity in relation to the company (including on “unofficial” channels) and elevate any unusual situations that may require a response from the company.