March 30, 2017

Mertons’ Corporate Snapshot March 2017

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

For further information or to discuss how these matters may affect you, please contact 03 8689 9997.


ASIC’s current focus remains on responsible lending, financial market integrity and gatekeepers

  • ensuring gatekeepers adhere to the high standards required by law, particularly where breaches indicate poor corporate culture or governance;
  • enforcing responsible lending practices in the credit industry, including a focus on systemic breaches by licensees; and
  • conduct risk and the integrity of financial market benchmarks.

Read the report.

ASIC updates RG175 – Financial product adviser – conduct and disclosure obligations

Regulatory Guide 175 Licensing: Financial product adviser ‑ conduct and disclosure (RG 175) has been updated to reflect regulatory and legislative changes, including revisions to the Future of Financial Advice (FOFA).

Read the new guidance.

Contact Mertons for a review of your processes for compliance with corporations’ law.

ASIC remakes class orders on application forms due to expire in 2017

Under current legislation, class orders expire after 10 years unless action is taken to preserve them.  A new instrument, ASIC Corporations (Application Form Requirements) Instrument 2017/241, consolidates and replaces the following class orders and instruments:

  1. [CO 02/260] Product Disclosure Statements: Application forms created by a licensee;
  2. [CO 14/26] Personalised or Australian financial services licensee created application forms;
  3. [CO 02/262] Applications to switch managed investment products;
  4. [CO 07/10] Technical disclosure relief for reconstructions and capital reductions (paragraphs 4 and 8);
  5. [CO 02/437] Eligible applications: Relief from s1016A for managed investment products; and
  6. ASIC Corporations (Options: Bonus Issues) Instrument 2016/77

Read the report.


The Gender diversity progress report for December2016–January 2017 reveals that women now account for 25% of ASX 200 board positions, up from 8.3% in 2009.

While much progress has been made, Australia still ranks 46th out of 144 countries in the OECD’s Global Gender Gap ranking and 50% on the Women in National Parliaments.  The World Economic Forum predicts that the gender gap won’t close entirely until 2186 – 169 years from now.

Quotas can be a central step in accelerating change.

Read the report.

Contact Mertons for assistance in developing an effective diversity policy, framework, and reporting.


The Australian Government released a consultation paper on the proposed Beneficial Ownership Register for Companies.

The February paper sought views on how to improve transparency of the beneficial ownership of companies – who owns, controls and benefits from companies – to help prevent and combat illicit activities such as tax evasion, money laundering, bribery, corruption and terrorism financing.

Questions raised included:

  • Should listed companies be exempt from any new requirements to report on its beneficial owners in light of existing obligations on such companies?
  • What beneficial ownership should be captured? How should Australia determine which beneficial owners have controlling ownership interest in a company such that information needs to be collected to meet the Government’s objective?

Consultation has now closed – paper available here.


The 7 conversations dominating Australia’s boardrooms

In the lead-up to International Women’s Day, AICD gathered together seven of Australia’s pre-eminent female directors to discuss the big issues they are confronting around their board tables.

  • Executive pay
  • The importance of non-financial targets
  • Technology
  • Whistleblowing
  • Corporate misconduct
  • Global outlook
  • Diversity

Read the complete article.

Challenges of IPO boards

Excerpt from an article by Tony Featherstone, AICD Governance Leadership Centre.

As the year shapes up to be one of the busiest in the IPO market, more directors will be invited to join the boards of newly listed companies. Directors are well advised to carry out due diligence and to understand the opportunities and risks of joining the board of an early-stage listed company.  IPOs present extra governance risks and challenges for directors.

Ultimately, prospective directors must have confidence in the CEO’s personality, reputation and ability to lead the company through this period of change and growth.

Read the complete article.

Thinking about listing? Contact Mertons for assistance with your IPO requirements.

Business role in addressing inequality and social inclusion?

Excerpt from an article by Lucas Ryan, AICD Senior Policy Adviser

Since 1970, the principle that has ruled is the ‘shareholder primacy’ principle – the idea that the sole purpose of companies was to create profit.

This thinking is changing and it is now well accepted that business has a role in addressing inequality in society and supporting social inclusion. A survey of directors – Driving productivity from the top – carried out by the AICD and KPMG found:

  • only three per cent felt that corporate Australia had no role in supporting social inclusion
  • 89 per cent felt that the inequitable distribution of benefits contributed to fraying social cohesion
  • 90% of ASX 200 providing some level of reporting on environmental, social and governance factors
  • 46% agreed that there is a connection between productivity and an organisation’s licence to operate

The report raises the question about board skills. “KPMG suggests that boards often find it difficult to accurately self-assess or successfully identify gaps, and then fail to adequately address gaps through professional development programs or recruitment and turnover.”

Read the article. Download the report Driving productivity from the top, by AICD and KPMG.

Contact Mertons for help with board performance reviews and board skills audit.


The Australian Tax Office has embraced the view that tax risk management should be part of good corporate governance. The new guide sets out principles for board and management and examples of evidence that demonstrate the operational effectiveness of their control framework for tax risk.

While the guide was developed primarily for large and complex corporations, the principles can be tailored for a corporation of any size. The Director’s Summary, provides an overview of directors’ responsibilities for tax risk management and governance.

  • A robust risk management framework, including tax risk
  • Three lines of defence approach to risk management
  • The board’s role in oversight and monitoring, effective governance and risk processes
  • Directors understanding of internal controls and the various points of communication where controls testing results are reported to the board.
  • Oversight of managerial level responsibilities.

The guide is available here.

Contact Mertons for a review and update of your risk management framework and processes


Charities fundraising code

The Fundraising Institute of Australia (FIA) is holding a series of consultation forums to gain stakeholder feedback on the proposed code. The recently released and revised draft fundraising code of conduct for charities proposes in three areas:

  • Reduced length of the code by removing duplication and using plain English
  • New protections for vulnerable people, including help to be removed from contact lists
  • A new compliance framework and compulsory code training for professional fundraisers.

More information is available at the Fundraising Institute of Australia.

Working with fundraising agencies

The Australian Charities and Not-for-profits Commission (ACNC) sees good fundraising practices as a core governance responsibility of a charity’s responsible persons.

“Where a charity decides to work with a professional fundraising agency, the responsible persons of the charity carry the ultimate responsibility for any actions taken in the charity’s name. Public trust and confidence in charities is critical, and failures within the sector to acknowledge risk in this area and take action to responsibly manage these risks are areas of concern for the ACNC.”

The ACNC has released a guide aimed at responsible persons and provides a list of matters to consider when looking at using a fundraising agency and practical steps for ensuring good governance.

Download the guide.

Contact Mertons for a review of your governance framework and processes.


More than 1,300 charities are at risk of having the Australian Charities and Not-for-profits Commission (ACNC) revoke their registration, for twice failing to submit their annual reports. The charities had until 27 March to submit their statements. Charities that have their status revoked lose access to tax concessions.

Information about charity reporting requirements is available at A list of charities at risk of double default is available on the ACNC website.

Contact Mertons to review your reporting requirements and set up processes and systems to ensure compliance with your reporting obligations.


Distributed ledger technology (DLT) and its most common application – blockchain – have created significant innovation in traditional record keeping. The World Economic Forum has listed blockchain as one of the top 10 emerging technologies of 2016. By removing the need for a trusted intermediary to monitor transactions, blockchain-based payments can reduce third party costs.

A report by Chartered Accountants Australia and New Zealand, and Deloitte Access Economics investigates the applications and implications for DLT.

Read the report here.


ASX non-business days and 2017 ASX Settlement Calendar

Following public consultation, ASX determined that effective 1 January 2017, the following public holidays – Bank Holiday (NSW), Labour Day (NSW), Labour Day (Victoria) and Melbourne Cup Day (Victoria) – will no longer be regarded as non-business days for settlement and Listing Rule purposes. Only days that are public holidays in both NSW and Victoria will be regarded as non-business days.

The 2017 ASX Settlement Calendar is available here.  A full list of dates of public holidays that are regarded as non-business days for settlement and Listing Rule purposes in 2017 is available here.

Be alert – lodging announcements just before market open or close

ASX Market Announcements Office tends to receive higher volumes of documents for release to the market just before the market opens at 10:00am and just before the market closes at 4:00pm. Announcements should be submitted to ASX by no later than:

  • 9:30am AEDT if it is to be released by market open at 10:00am AEDT; or
  • 3:40pm AEDT if it is to be released by market close at 4:00pm AEDT.

If a listed entity is trying to lodge a market sensitive announcement before market open and it becomes apparent that it will not meet the deadline, it should immediately contact the ASX markets announcements office to discuss options. This may include putting in place a trading halt to cater for the delay.

Annual report deadline

Annual reports for listed entities with 31 December balance date are due Monday 1 May 2017. Failure to lodge the relevant documents on time will result in an automatic suspension of trading in the entity’s securities (refer to listing rule 17.5).


The NZ Stock Exchange (NZX) saw a 19.8% increase in trading volumes in 2016, while the total value traded grew by 5.5%. NZX’s debt markets also grew strongly, with NZ$6.4 billion of new debt listed.

Listing Rules Practice Notes launched

NZX recently launched the first in a regular series of Practice Notes. These are an additional tool to existing guidance notes, and are designed to help listed issuers understand and comply with listing rules obligations. View Practice Notes.

Proposed amendments the NZX Corporate Governance Rules

NZX has considered consultation feedback and has developed proposed amendments to the NZX Corporate Governance Code. Submissions can be found on the NZX website – see here. NZX is working to finalise the Code and expects it to take effect by 31 December 2017.

Continuous disclosure and trading halts

NZX Listing Rules impose a continuous disclosure obligation of material information. It is best practice to manage company activities in a way that enables disclosure of material information before the market opens. Section 6 of NZX’s Guidance Note on Continuous Disclosure, sets out some relevant examples.

If material information arises during a trading day, the issuer must release that information immediately. In some limited circumstances, the issuer may need time to assess the information received. In these cases, the issuer should contact NZXR to discuss whether a training halt is appropriate.


Sources of information: Australian Charities and Not-for-profits Commission (ACNC); Australian Competition and Consumer Commission (ACCC); Australian Government; Australian Institute of Company Directors (AICD); Australian Securities and Investments Commission (ASIC); Australian Securities Exchange (ASX); Australian Taxation Office (ATO); Chartered Accountants Australia and New Zealand; Deloitte; Governance Institute; KPMG; McKinsey; New Zealand Stock Exchange (NZX).

Disclaimer: The content of Mertons’ Snapshot is intended to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its currency. You should seek legal or other professional advice before acting or relying on any of the content.