Acclime Corporate Snapshot – July 2024.
What does ‘over-subscribed’ mean to you?
ASX has issued a reminder that this term is widely misused. If an announcement states that a placement was ‘over-subscribed’, this normally means that applicants applied and paid for more securities than could be allocated to them so that the surplus funds were remitted to them.
According to ASX, the term ‘over-subscribed’ should not be used in any other context. If demand for placement exceeds the funds the listed entity seeks to raise, and the entity feels compelled to comment upon that in its announcement, it should use those words or something similar that is accurate and not misleading.
Industrial manslaughter laws now in force in NSW
The Bill creating a new offence of Industrial Manslaughter was introduced to NSW’s lower house on 4 June and received assent on 24 June.
It adds the offence to the Work Health and Safety Act 2011 (NSW), ushering in severe penalties for breaches of existing safety duties where gross negligence causes a person’s death. For individuals, these are up to 25 years imprisonment, and for corporate bodies, up to $20 million in fines.
There is no limitation period on industrial manslaughter proceedings, unlike other offences under the Act.
You can read the full text of the Act, and trace its passage through parliament, here.
J.P. Morgan fine highlights gatekeeper responsibilities
ASIC’s Market Disciplinary Panel (MDP) has handed a $775K fine to J.P. Morgan after the company failed to detect suspicious trading by a client in early 2022.
The MDP found J.P. Morgan should have suspected that dozens of orders placed by a client were submitted with the intention of creating a false or misleading appearance.
The decision stands as a warning that market participants cannot solely rely on automated trade monitoring to reveal misconduct, and must take immediate action once alerted by ASIC. They should ensure staff have the requisite product knowledge and expertise to oversee the market and be able to detect and report suspicious behaviour.
Towards a firmer FIRB framework
On 1 May, Treasurer Jim Chalmers announced changes aimed at strengthening the Foreign Investment Review Board (FIRB) regime, and making it clearer and more streamlined. Simultaneously, the Government released a revised Foreign Investment Policy document, expanding upon the changes.
In a comprehensive analysis, commercial lawyers Allens have looked at the FIRB changes, and concluded:
- most of the change will be in policies, processes and resources, rather than legislation;
- FIRB assessment processes will be streamlined, to make foreign investment proposals less risky;
- Manufacturing, professional services, commercial real estate, new housing and mining of non-critical minerals have been identified as lower-risk sectors which can be streamlined; and
- Critical infrastructure, technology and minerals, and investments that are proximate to security-sensitive facilities and data, will be classified as ‘sensitive sectors’, and treated with greater scrutiny.
Significant spike in company failures
ASX has published insolvency data for the first three quarters of FY2023-24, and the results show a concerning trend.
In those nine months, 7,742 companies entered external administration, a 36.2% increase on the corresponding period ending 31 March 2023. Construction, and accommodation and food services industries were heavily represented, at nearly 27.7% and 15.2% respectively.
Restructuring and court liquidation appointments increased by 294.6% and 218.8% respectively. It’s expected that the number of companies entering external administration by 30 June 2024 will exceed 10,000, a level not seen since the 2012–2013 financial year.
New guidance for not-for profit directors
The Australian institute of Company Directors has released its third edition of the AICD Not-for-Profit Governance Principles.
The Principles give vital guidance to directors of Australian not-for-profits, including charities. Updated from previous editions, they reflect the evolving governance environment including greater board focus on organisational culture, stakeholders and sustainability. Consultation with directors, government, legal experts, peak bodies and other stakeholders ensures the new edition captures perspectives from the broader NFP sector.
Each principle is presented as a chapter comprising key points, director questions, case studies and links to additional resources. The Principles are accompanied by a concise small NFP governance checklist, as well as a brief snapshot of the overall Principles and a targeted resource on how to elevate the client voice into decision-making.
Accc’s 2024-25 compliance and enforcement priorities
Just before we hit ‘send’ on our previous Snapshot, ACCC Chair Gina Cass-Gottlieb announced the ACCC’s 2024-25 compliance and enforcement priorities.
The supermarket duopoly is in the frame, as are essential services like telecommunications, aviation, electricity, gas and financial services. All of these will be key compliance and enforcement priorities for the year ahead, alongside continued focus on consumer protection in the digital economy.
Sources of information: Ashurst, Australian Securities Exchange Ltd (ASX); Australian Securities and Investments Commission (ASIC); Allens; Australian Institute of Company Directors (AICD), Australian Competition and Consumer Commission.
Disclaimer: Acclime 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. Acclime Australia attempts 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.
