December 16, 2021

Mertons’ Corporate Snapshot – December 2021

Mertons’ Corporate Snapshot – December 2021

Mertons’ Corporate Snapshot provides you with an overview of current corporate governance matters, including regulatory changes, trends, and other important issues.

To discuss how these may affect you, please contact us on 03 8689 9997.

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Last Year’s ASX Outage Brings Changes

ASIC has reported on its investigation of the November 2020 market outage at the ASX, and imposed additional licence conditions on three of the ASX group’s licences. The report into the outage notes serious deficiencies in ASX’s precautions against impacts on liquidity, some of which ASIC had raised as early as 2016.

The new conditions require remediation of underlying issues that led to the outage, assign accountability to the ASX board and senior executives for implementation, and require ASX board attestations that adequate controls, procedures, skills, and resources are in place.

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Strengthening Protections Against Ransomware

Large Australian businesses will be subject to new mandatory ransomware incident notification requirements, and new and stronger criminal offences will apply to cybercriminals under reforms announced by the Minister for Home Affairs.

Known as the Ransomware Action Plan, the measures include current initiatives to improve cyber security generally, as well as future legislative reforms aimed at preventing ransomware attacks, and a clear policy statement on the payment of ransoms. There’s also a specific offence contemplated for the targeting of critical infrastructure.

In related news, the Australian Institute of Company Directors (AICD) has also updated its online course on cybercrime.

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Focus on Whistleblower Policies

ASIC has written to CEOs of public companies and super funds to encourage compliance with whistleblower protection laws. A review of whistleblower policies revealed inadequacies across a sample of companies, leading to concern that those with information may be hesitant to come forward for fear of lax protection measures.

You can read a copy of the letter here.

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External Administration Made Simpler

ASIC has issued regulatory relief to provide clarity and reduce red tape for companies in external administration. The relief centres upon ongoing financial reporting and AGM obligations when a company is in external administration.

Time is extended for a company to prepare and lodge financial reports for at least six months and up to 2 years, and also for public companies to hold an AGM (until two months after deferral relief ends).

The detail of the updated relief can be found in Regulatory Guide 174.

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Insolvency Safe Harbour Under Review

A federal government review will examine the 2017 “safe harbour” provisions that give directors a limited defence to personal liability. The provisions aim to encourage directors to take sensible risks, engage early and keep control of their company. Feedback about their efficacy is thought to be positive, but the AICD believes further reform is possible, citing evidence that Australia’s director liability scheme is relatively onerous.

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Energy Fairness Legislation to Come into Effect

The Energy Legislation Amendment (Energy Fairness) Act 2021 (Vic), includes new prohibitions on door-to-door sales, cold calling and the use of ‘save’ or ‘win-back’ customer retention offers which will commence, by proclamation, on 31 December 2021. 

The Act also creates new criminal offences for the wrongful disconnection of gas or electricity supply, or where disconnection endangers a person on life support equipment, and tightens deadlines for registering customers who require life support protections.

For energy retailers, the end of calendar year represents a timely reminder to review marketing methods. You can read the amending Bill here.

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Uptick in M&A Activity

Recent research indicates a boom in M&A transactions in Australia in the first half of 2021, eclipsing all comparable periods. This lift is reflective of international trends: US$2.6tr worth of transactions were completed globally in the same period, compared with US$1.2tr for the corresponding period of 2020.

The drivers of the increased activity are thought to be “higher business confidence, lower interest rates, ESG factors and the need for private capital to be invested.”

The trend has been examined in a recent, detailed piece by Herbert Smith Freehills partner Rodd Levy.

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Sources of information: Ministry of Home Affairs; Australian Securities and Investments Commission (ASIC); Australian Institute of Company Directors (AICD); Herbert Smith Freehills.

Disclaimer: Mertons Corporate Snapshot is only intended to provide a general overview on matters of interest. It is not intended to be comprehensive and is not legal advice. We attempt to ensure that content is current but we do not guarantee its currency. You should seek legal and/or professional advice before acting or relying on any content.