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 consider the Treasury’s Corporate Plan for 2021-2022, the review of insolvency safe harbour laws, a bill which will allow technology to be used to hold meetings and sign documents, the Senate Economic References Committee’s report into foreign investment proposals, a Queensland Court of Appeal case regarding oral joint venture agreements and Australia’s first misleading and deceptive conduct claim founded on a net zero emissions target.
GOVERNANCE & REGULATION
Treasury releases Corporate Plan for 2021-2022. The Treasury has published its Corporate Plan for 2021-2022. The Plan summarises what the Treasury intends to achieve in the upcoming year and what challenges it faces, including in particular how Australia is recovering from, and continuing to respond to, the COVID-19 pandemic. The Plan is broken down into key activities to be undertaken over a four-year period to address the overarching priorities of (1) a strong and sustainable economic and fiscal environment, (2) effective government policies and (3) organisational capability and sound governance and assurance. See the Treasury’s Corporate Plan 2021-2022.
Review of insolvency safe harbour laws. As prompted in the 2021-22 Federal Budget, the Treasury has announced that the Government will conduct a review of the insolvent trading safe harbour established under the Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017. Questions have been raised whether the existing safe harbour provisions afford directors the protection they required in order to undertake restructure activities in marginally solvent entities. The purpose of this review is to ensure that those provisions remain fit for purpose, and their benefits can extend to as many businesses as possible. The review addresses various points on the efficacy of the provisions, including the impact they have had on the conduct of directors and the interaction with the COVID-19 insolvent trading moratorium. Submissions are open until 1 October 2021. See the Treasury’s consultation page.
Treasury Laws Amendment (Measures for Consultation) Bill 2021. Last week, the Treasury released an updated version of the Treasury Laws Amendment (Measures for Consultation) Bill 2021 (Bill), which aims to make permanent various temporary measures allowing companies to use technology to hold meetings and electronically sign and execute documents. There is nothing surprising set out in the draft Bill as considered against the current temporary measures in place. Submissions on the draft Bill remain open until 10 September 2021. See the Treasury’s consultation page.
Senate Economics References Committee report on inquiry into foreign investments proposals. Following its investigation into foreign investment proposals the Senate Economic References Committee has released its report entitled “Greenfields, Cash Cows and the Regulation of Foreign Investment in Australia”. While broadly supportive of foreign investment, the report raises concerns about the administration and transparency of Australia’s foreign investment regime and suggests the Treasury must improve its oversight and enforcement of foreign investment approval conditions. Foreign investment laws have already seen the most significant changes in decades this year, and it seems unlikely that the government will agree to act on the Committee’s findings, with the dissenting voices on the committee suggesting time was needed to “bed down” the most recent reforms. See the Senate Committee’s inquiry home page.
Queensland Court of Appeal findings serve as warning against oral joint venture agreements. The Queensland Federal Court in Hookey v Whitelaw  QCA 181 held that there was no joint venture agreement entered into by parties orally. This decision essentially turned on evidence that the parties did not intend to be legally bound by the oral agreement unless and until a formal agreement was executed due to the fact that the oral agreement did not address “critical terms” of the alleged joint venture. On this same basis, no estoppel claim was upheld to enforce the oral agreement. This ruling serves as a reminder for parties to execute a formal agreement to give effect to joint venture arrangements, which should include the critical terms relating to how the joint venture will operate.
OVER THE HORIZON
First misleading and deceptive conduct case on “net zero” commitment. Following what has been a year of firsts in climate change litigation on a global platform, proceedings have been commenced in the Federal Court in what will be Australia’s first misleading and deceptive conduct case founded on a “net zero” emissions claim. On 25 August 2021, the Environmental Defender’s Office (acting on behalf of the Australasian Centre for Corporate Responsibility) submitted a statement of claim against Santos Limited, in relation to statements made in Santos’ 2020 Annual Report referring to its “credible and clear plan” to achieve net zero emissions by 2040. The claim is that these statements constitute misleading and deceptive conduct. If this claim is upheld, or at least entertained, by the Federal Court, it will represent the first occasion on which Australian consumer law principles are co-opted in support of litigation over so-called “Greenwashing”. To date, much of the focus in Greenwashing cases has been on directors’ (or regulators’) duties to have regard to the climate change impacts of their decisions. The use of misleading and deceptive conduct provisions in the Corporations Act and Australian Consumer Law has the potential to greatly expand the environmental battleground for corporate Australia.