In this edition of Gilbert + Tobin's Corporate Advisory Update, we focus on key legal developments over the last month which are particularly relevant to in-house counsel.
ASIC allows additional time to hold virtual only meetings
ASIC has granted relief to allow additional time for certain companies and registered schemes to hold virtual-only meetings. Under ASIC Corporations (Virtual-only Meetings) Instrument 2022/129, all listed companies, together with listed and unlisted registered schemes, will continue to have the option to hold virtual-only meetings until 31 May 2022 (an additional two months). For unlisted companies, the extension is until 30 June 2022, which aligns with the extended deadline for unlisted public companies with 31 December 2021 year ends to hold their AGMs.
Before a company or responsible entity of a registered scheme relies on the relief, the directors of the company or responsible entity must pass a resolution that it would be unreasonable for the company or registered scheme to hold a meeting of its members wholly or partially at one or more physical venues, due to the impact of the COVID-19 pandemic.
This extension is in addition to the permanent reforms to the Corporations Act to permit hybrid meetings and (if allowed under the entity’s constitution) virtual-only meetings which came into effect on 1 April 2022.
See ASIC media release.
Treasury consults on crypto regulatory framework (Crypto Consultation Paper/CASSPrs)
On 21 March 2022, Treasury released its consultation paper on a proposed regulatory framework for crypto asset secondary service providers. The paper sets out a range of proposals for industry comment, primarily drawing inspiration from the existing financial services licensing regime.
A recent G+T Insight unpacks the proposals and what this could mean for the crypto industry.
Analysis of Australian public mergers & acquisitions in 2021
G+T has published the 2022 edition of our Takeovers + Schemes Review, which examines 2021’s public mergers and acquisitions valued at over $50 million involving ASX-listed companies. We provide our perspective on the trends for Australian M+A in 2021 and what that might mean for you in 2022.
The curtain falls – Final reforms to Australia’s critical infrastructure laws
On 31 March 2022, after a long and circuitous journey, Parliament passed the Security Legislation Amendment (Critical Infrastructure Protection) Act 2022 (SLACIP Act) which implements the final package of amendments that began in 2021 to the Security of Critical Infrastructure Act 2018 (Cth).
A recent G+T Insight revisits the background to the SLACIP Act, examines its key features, and considers the next steps for implementation and measures that affected businesses will have to take to ensure compliance. While the passing of the SLACIP Act is a significant milestone, it is also only the beginning of efforts to protect Australia’s critical infrastructure, with ongoing industry engagement still to come.
Read more: The curtain falls - Final reforms to Australia’s critical infrastructure laws
Federal Budget 2022-23
The 2022-23 Budget contains few surprises. A mix of a short term cash splash aimed at families (with an election just weeks away), some small business measures and some longer term capital investments in infrastructure and training, the Budget has a little something for everyone. However, much needed genuine structural tax reform remains missing in action.
Two recent Insights by the G+T’s Tax Team and Infrastructure Team outline the key highlights.
Cyber security guidance for ASIC-regulated entities
On 23 February 2022, the Australian Cyber Security Centre (ACSC) encouraged Australian organisations to urgently adopt an enhanced cyber security position. While the ACSC is not aware of any specific threats, there is a current heightened threat environment following the attack of Ukraine.
ASIC has since encouraged all ASIC-regulated entities to improve their cyber security resilience by reviewing and enhancing detection, mitigation, and response measures. They should also assess their preparedness to respond to any cyber security incidents and review incident response and business continuity plans.
ASIC also reminded boards, senior management, licensees and regulated entities to consider whether they have an obligation to report breaches to ASIC or other government agencies, and also where disclosure to the market or in financial reports may be necessary.
ACCC releases its 2022-23 Compliance and Enforcement priorities
In his annual address at the committee for Economic Development of Australia, the then Chair of the ACCC, Rod Sims, announced the regulator’s 2022-23 Compliance and Enforcement Priorities. The coming year’s priorities reiterate many enduring priorities from previous years with some new and sharpened focal points including greenwashing, exploitative techniques used by online businesses, anti-competitive behaviour in COVID-impacted supply chains and exclusivity arrangements. On 21 March 2022, Ms Gina Cass-Gottlieb, commenced as new Chair of the ACCC.
The effect of the SEC’s proposed climate-related disclosures on Australian companies
The United States Securities and Exchange Commission recently issued a Proposed Rule to enhance and standardise the climate-related disclosures provided by public companies. A recent G+T Insight reports on the significance of this rule for Australian companies who have securities registered under the Exchange Act, as they calculate their annual greenhouse gas emissions and assess the climate-related risks their businesses face. If the Proposed Rule is adopted, it may also inform the scope and content of future disclosure requirements in Australia.
Worley shareholders successfully appeal dismissal of their class action
In October 2020, the Federal Court dismissed a shareholder class action commenced in relation to Worley Limited (Worley). The class action sought compensation for shareholders who acquired Worley shares between 14 August 2013 and 19 November 2013 on the basis that Worley failed to inform the market of its true earnings position, alleging Worley did not have reasonable grounds for forecasts in its quarterly reports released during this period.
The class action was ultimately dismissed by the Federal Court in October 2020, but that decision has now been successfully appealed. In overturning the decision, the Full Federal Court determined Worley did not have reasonable grounds for its earnings guidance and clarified that the relevant test is whether the Board ought to have known that Worley did not have a reasonable basis to forecast increased earnings, not whether the Board acted reasonably or unreasonably given the information made available to it. The Court noted the latter approach would “effectively reward a publicly listed company for having such poor information systems and management procedures that the company does not come into possession of important, market-sensitive information and does not form an opinion based on known facts”.
The Full Federal Court’s decision serves as an important reminder for directors to consider the adequacy of information-sharing systems and processes currently in place, and whether these effectively mitigate any information gaps between management and the Board.
Thanks to Justin Mannolini, Partner and Janelle Sputore, lawyer for this insight.
No ‘Duty of Care’ but risks of climate litigation continue to grow – insights from the Sharma decision
On 15 March 2022, the Full Federal Court delivered its unanimous judgment in Minister for the Environment v Sharma  FCAFC 35. The appeal overturned the primary judge’s finding that the Commonwealth Minister for the Environment owed a novel duty of care at common law to Australian children who might suffer potential harm from the climate change implications of exercising her powers under the Environment Protection and Biodiversity Conservations Act 1999 (Cth).
A recent G+T Insight summarises the Full Court’s decision in finding that the duty of care should not be imposed on the Minister and outlines key insights regarding this decision and what it means in the context of the rise in climate change litigation both in Australia and overseas.