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 the release of the Digital Assets (Market Regulation) Bill 2022 for consultation, the ACCC’s warning to companies in relation to environmental claims, the opportunity for increased gender diversity in IPOs as indicated in AICD’s latest report, and look at ASIC’s proposed relief in relation to the employee share scheme regime. We also discuss the application received by the Takeovers Panel in relation to Nimrod Resources Limited and the Federal Court proceedings against five AMP companies.
In Over the Horizon, we look towards the Reserve Bank of Australia’s upcoming meeting on Tuesday 4 October, which is broadly expected to result in a further increase to Australia’s cash rate.
GOVERNANCE & REGULATION
Digital Assets (Market Regulation) Bill 2022 released for consultation. On 19 September 2022, Liberal Senator Andrew Bragg released a draft private member’s bill titled the Digital Assets (Market Regulation) Bill 2022 (Bill) that proposes a licencing and reporting framework for digital asset exchanges, digital asset custodians, and stablecoin issuers. The Bill seeks to provide a standards-based regime aimed at increasing consumer confidence about risk exposure, providing regulatory certainty, and driving further investment and growth in Australia’s crypto ecosystem and virtual economy. While the Bill was not introduced by the current government, it has the capacity to become law if passed by both houses of Parliament. Submissions on the Bill are due by 31 October 2022. See the Digital Assets (Market Regulation) Bill 2022 and G+T Knowledge article.
ACCC Deputy Chair warns companies to be prepared to back up their environmental claims. Directors should note the continued escalation of regulatory warnings regarding “greenwashing” and potentially misleading environmental claims. On 20 September 2022, Australian Competition and Consumer Commission (ACCC) Deputy Chair Delia Rickard warned that the ACCC may ask businesses to substantiate their environmental or green claims with evidence, and that ‘the ACCC won’t hesitate to take enforcement action where [they] see that consumers are being misled or deceived by green claims’. This is not surprising given that the ACCC listed greenwashing as one of its compliance and enforcement priorities for 2022 to 2023 back in March 2022. On 9 September 2022, ACCC Chair Gina Cass-Gottlieb noted that the ACCC’s preferred tool for investigating these claims may be the use of substantiation notices. Boards must be ready to, and be confident that they can, substantiate their green claims. See ACCC media release and G+T Knowledge article.
AICD report indicates opportunity for increased gender diversity in IPOs. The latest Gender Diversity Progress Report (Report) issued by the Australian Institute of Company Directors (AICD) indicates that women only held 12.2% of the board positions of companies newly listed on the Australian Stock Exchange (ASX) between 2019 and 2022. The materials sector was a significant contributor, with women holding only 5% of the total number of board positions despite materials companies accounting for almost half of all Initial Public Offerings. The Report follows similarly concerning findings by Chief Executive Women (discussed in a previous edition of Boardroom Brief) that representation of women in senior leadership teams of top public companies in Australia is declining. AICD Managing Director and CEO Mark Rigotti encourages companies to set a clear direction to ensure that women on boards is an outcome rather than an objective. See AICD media release.
ASIC consults on proposed relief in relation to employee share scheme regime. On 29 September 2022, the Australian Securities and Investments Commission (ASIC) released a consultation paper proposing to provide relief in relation to the recently amended employee share scheme regime in the Corporations Act (which came into effect on 1 October 2022). Broadly, the relief proposes to expand the secondary sale exemption for financial products that are quoted on a financial market, modify financial information reporting requirements for foreign companies, permit companies to provide a valuation of financial products other than shares in an independent expert report, and enable salary sacrifice arrangements to comply with requirements for contribution plans. Submissions are due by 27 October 2022. ASIC intends to terminate the ability to make new offers under Class Order 14/1000 and 14/1001 from 1 January 2023. See ASIC media release.
Takeovers Panel receives application in relation to the affairs of Nimrod Resources Limited. On 27 September 2022, the Takeovers Panel announced that it received an application from Romell Pty Ltd (Romell) in relation to the affairs of Nimrod Resources Limited (Nimrod). Romell submits that Goldtower Construction Pty Ltd ATF GTC Trust (Goldtower) invalidly increased its interest in Nimrod from 33% to 43.87% via participation in an entitlement offer without appointing a nominee in respect of foreign shareholders as required by section 615 of the Corporations Act 2001 (Cth) (Corporations Act). Romell is seeking interim orders that Goldtower be restrained from exercising voting rights attached to its shares in Nimrod in excess of 36% (the amount in excess of the creep provisions), or acquiring or disposing of any shares in Nimrod. Romell also seeks final orders that Goldtower be required to make a takeover bid for all remaining shares in Nimrod, that Goldtower’s excess shares be vested in ASIC for sale, or that Goldtower be permanently restrained from exercising voting rights attaching to the shares in excess of 36%. A sitting Panel has not been appointed yet, and no decision has been made whether to conduct proceedings. See media release.
AMP companies fined $14.5 million for fees for no service. On 20 September 2022, in proceedings instituted by ASIC, the Federal Court ordered five companies that were or are part of the AMP Limited group (AMP) to pay $14.5 million in penalties for charging fees to superannuation members for services they did not provide. The members had been paying fees for general financial advice as part of an agreement between AMP and their former employer. AMP continued charging those fees after the members ceased their employment despite knowing that they no longer had access to the financial advice. The Court found that AMP had wrongfully deducted $356,188 in fees, and AMP admitted liability to these failures. The Court further found that AMP had failed to investigate whether or not there was a systemic issue. ASIC Deputy Chair Sarah Court stated that the penalties should be treated as ‘an important reminder to maintain robust internal governance and assurance arrangements’. See Australian Securities and Investments Commission v AMP Financial Planning Proprietary Limited  FCA 1115 and ASIC media release.
OVER THE HORIZON
All eyes are on the Reserve Bank of Australia. With its next meeting scheduled for Tuesday, 4 October 2022, and following the US Federal Reserve lifting rates by 75 basis points last week, the RBA is widely expected to lift rates for the fifth consecutive month. Inflation eased over August and September 2022 to around 6%, but remains more than twice the RBA’s target of between 2 – 3%. Despite the differing views amongst economists as to where the rate would finish for 2022, the consensus for this month is for a 50 point increase to 2.85%, the highest rate in nine years.