Welcome to Edition 117 of Boardroom Brief.

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.


RBA cuts cash rate to 1%. The RBA’s cut by 25 bps for the second time in as many months means the rate is now the lowest ever in Australian history. The decision (hoped to boost the economy enough to drive down unemployment and increase wages) lifted the local sharemarket to within touching distance of its highest ever close but weighed heavily on bank stocks. The RBA noted global economic uncertainty (largely due to the China-US trade dispute) and below trend domestic economic growth over the past year, with household consumption stumped by low wage growth and falling house prices. You can read the RBA’s Statement here. The passage last week of the Federal Government’s much touted $158 billon tax plan, the removal of a key prudential handbrake on home lending, and the likelihood of a reduction in the “deeming rate” for part pensioners (which will increase welfare spending) add significantly to recent stimulus. However, Directors should consider the potential impact of what appears to be a rapidly deteriorating domestic economy on their businesses.

Scheme recommendations by interested directors under the spotlight. Schemes of arrangement are increasing in popularity as a mechanism to implement change of control transactions. See G+T’s article for an analysis of the key case law on scheme recommendations by directors who will receive a benefit — being pecuniary interests in the outcome of the scheme different to those of other shareholders — in connection with a scheme’s implementation. Where an interested director intends to recommend the scheme, parties must ensure that interested director’s benefit is prominently disclosed in the chairman’s letter and wherever else the unanimous recommendation is mentioned in the scheme booklet. The target must also be vigilant of how the recommendation of an interested director is being represented in all shareholder communications on the scheme (including, for example, telephone canvassing for votes). Directors are reminded to think carefully, prior to executing a scheme implementation agreement, about the appropriateness of all directors making a recommendation and ensure conditions are crafted appropriately.

ASX releases Activity Report for June 2019. ASX’s Group Monthly Activity Report for June 2019 notes that total capital r­aised during the month was $7.3 billion, up 60% on the previous corresponding period (pcp). The average number of daily trades was 41% higher than the pcp and the average daily value traded on-market was $5.5 billion, 16% higher than the pcp. Average daily options volume was up 9% on the pcp, while the value of securities held in CHESS was 5% higher.


ASIC to hold public hearings on responsible lending guidance. ASIC has published the 64 non-confidential submissions made in response to the consultation earlier this year and announced public hearings in August (in Melbourne and Sydney and live streamed online) will now test the views of stakeholders and provide greater understanding of business operations.