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 proceedings commenced by the Australian Securities and Investments Commission (ASIC) against Telstra Super for alleged failures to comply with internal dispute resolution requirements, and Treasury’s consultation on Australia’s Sustainable Finance Strategy and continuous disclosure regime amendments. We also examine ASIC’s second publication on the reportable situations regime insights and the Victorian Supreme Court’s adoption of the harmonised approach to schemes of arrangement.
In Over the Horizon, we discuss the global solidarity and optimism characterising the path forward for artificial intelligence (AI) regulation displayed at the recent Global AI Summit in London.
REGULATION
ASIC commences Australian-first proceedings against Telstra Super for alleged failures to comply with internal dispute resolution requirements. On 6 November 2023, ASIC announced that it commenced civil penalty proceedings against Telstra Super in the Federal Court of Australia for alleged failures to comply with internal dispute resolution requirements. This is the first proceeding under this regime, which commenced on 5 October 2021 and makes certain provisions of ASIC Regulatory Guide 271 Internal dispute resolution enforceable. ASIC Deputy Chair Ms Sarah Court warned that “[f]inancial service providers need to prioritise dispute resolution procedures to properly protect consumers”. See ASIC media release.
Treasury consults on Australia’s Sustainable Finance Strategy. On 2 November 2023, Commonwealth Treasury released Australia’s Sustainable Finance Strategy for public consultation. The strategy is intended to support Australia’s pathway to net zero emissions by 2050 by introducing a comprehensive framework for reducing barriers to sustainable investment. The policy priorities outlined in the strategy are structured around three key pillars, being: (1) improving transparency on climate and sustainability; (2) financial system capabilities; and (3) Australian Government leadership and engagement. Importantly, the consultation paper notes that Australia’s strategy should be aligned with global frameworks and take a “high ambition” approach, so as to minimise the compliance burden for Australian firms seeking to participate in global capital flows. Treasurer Dr Jim Chalmers noted that the Strategy “is all about mobilising the significant private capital required to achieve net zero, modernising our financial markets and maximising the economic opportunities associated with our energy, climate and sustainability goals”. The consultation period closes on 1 December 2023. See Treasury webpage.
Treasury consults on review of continuous disclosure regime amendments. On 1 November 2023, Treasury announced a public consultation to assist the independent review of the Treasury Laws Amendment (2021 Measures No. 1) Act 2021 (Cth) (Amendment Act) (discussed in a previous edition of Boardroom Brief), which made various changes to the continuous disclosure regime contained in the Corporations Act 2001 (Cth) (also discussed in a previous edition of Boardroom Brief). Notably, the Amendment Act introduced a requirement for plaintiffs to prove that companies and their officers acted with “knowledge, recklessness or negligence” to establish a breach of continuous disclosure laws in civil penalty proceedings. The consultation seeks submissions on the impact of the 2021 amendments across a range of issues including the nature and quality of disclosures by companies, the capacity of ASIC to enforce continuous disclosure laws and the efficiency of the Australian securities market. The consultation period closes on 1 December 2023, and the independent review is due to be completed by 14 February 2024. See Treasury webpage.
ASIC releases second publication on insights from the reportable situations regime. On 31 October 2023, ASIC released a report outlining insights from notifications lodged under the reportable situations regime between 1 July 2022 and 30 June 2023. Since 1 October 2022, Australian financial services licensees and Australian credit licensees have been required to submit notifications about reportable situations (previously known as breach reports) to ASIC. The report suggests that little improvement has been made in the key areas for concern identified in ASIC’s first publication, which reviewed notifications lodged between 1 July 2021 and 30 June 2022. These areas include the low proportion of reporting licensees, the length of time taken to identify and investigate breaches or to complete remediation activities, and opportunities to improve identification and reporting of root causes of breaches. ASIC Chair Mr Joe Longo stated that “ASIC will now move to taking stronger regulatory action to drive improved compliance with the regime, including enforcement action where appropriate”. See ASIC media release and Report.
LEGAL
Supreme Court of Victoria adopts harmonised approach to schemes of arrangement. On 1 November 2023, the Supreme Court of Victoria issued a new Practice Note to adopt the Practice Note – Harmonisation in schemes of arrangement developed by the Committee for the Harmonisation of Rules Committee of the Council of Chief Justices of Australia and New Zealand. In doing so, the Supreme Court of Victoria has followed the approach of the Federal Court of Australia, the Supreme Court of New South Wales and the Supreme Court of Western Australia (see previous edition of Boardroom Brief). The new Practice Note is a further consolidation of the harmonised approach across superior courts with respect to the conduct, procedure and evidence requirements applicable to members’ schemes of arrangement. See Supreme Court of Victoria Practice Note SC CC 9 at PN 4.1.
OVER THE HORIZON
AI Safety Summit indicates path forward for regulators. On 1 and 2 November 2023, the inaugural AI Safety Summit was held in London, bringing together international governments, leading AI companies, civil society groups and research experts. The summit’s aim was to consider the risks of AI, especially at the frontier of development, and to discuss how these risks can be mitigated through internationally coordinated action. Despite the absence of any concrete decisions, participating countries endorsed the Bletchley Declaration as a demonstration of their collective dedication to addressing the issue. The Bletchley Declaration includes, among other things, an affirmation that “for the good of all, AI should be designed, developed, deployed, and used, in a manner that is safe, in such a way as to be human-centric, trustworthy and responsible”. Acknowledging the lack of consensus on AI regulation at an international level, the summit showcased a notable display of global solidarity, fostering optimism that it could catalyse both international and domestic AI regulatory efforts and shape the way that the business of tomorrow is conducted. The next AI Safety Summit is scheduled to be hosted by South Korea in six months, followed by France in a year. See Bletchley Declaration.
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