Acclime Corporate Snapshot – September 2024.
Acclime 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.
Climate-related financial reporting about to launch
New Federal laws have instigated a monumental shift in the way businesses prepare their annual reports. From 1 January, “Group 1” entities (as defined by revenue, gross assets and/or employee numbers) will need to provide a climate statement with accompanying notes, other statements prescribed by regulation and a directors’ declaration.
The new laws make Australia a global leader in mandatory climate reporting.
The climate statement will need to include:
- Material on climate-related financial risks and opportunities faced by the entity;
- Scope 1, 2 and 3 GHG emissions and related reduction targets;
- Information about governance of, strategy of or risk management by the entity in relation to these risks, opportunities, metrics and targets; and
- An assessment of the entity’s resilience to climate-related changes using scenario analysis.
You can read a deep-dive on the new regime from Allens here.
Regulatory measures rush to keep up with AI
The Federal Government is consulting the public on its proposed mandatory guardrails for high-risk AI systems and models. The consultation period ends 5pm AEST on Friday 4 October 2024.
Simultaneously, the Government has released voluntary standards (mostly reflecting the mandatory guardrails) for organisations to use in safely and responsibly developing AI systems so that they meet existing international standards. The ambition is that such entities will be ready when the mandatory environment comes into effect.
Continuous disclosure laws to retain “fault” element
The Federal Government has committed to retaining the “fault” element for breaches of continuous disclosure laws in private litigation, as part of its response to the independent Lewis review into Australia’s continuous disclosure regime.
The fault element, long-sought by the Australian Institute of Company Directors (AICD), ensures that companies and officers are only liable for civil penalties where they have acted with “knowledge, recklessness or negligence.”
To understand the importance of that provision, it’s worth a look at the AICD’s original submission to the review.
Please leave a message: The right to disconnect
Since 26 August, employees have had a new, but limited, right to disconnect outside work hours.
The right to disconnect permits workers to refuse to monitor, read or respond to contact from their employer, or third parties like customers or clients outside their working hours, unless their refusal is unreasonable.
On the anniversary of the provision, in August next year, the rule will extend to small business employers.
Many employers are now under the obligation not to treat an employee detrimentally for a reasonable refusal to monitor, read or respond to out of hours contact. The concept of “unreasonable” refusal is likely to be contentious: it is assessed against the nature of an employee’s role and their level of responsibility.
All modern awards will also be varied to include a right to disconnect term.
Ashurst have published an excellent summary of the new regime here.
The sum of all fears: Getting cyber security laws right
Among measures being considered in a new draft cyber-security Bill is a mandate on ransomware reporting. The requirement would apply to businesses with an annual turnover of more than $3M, and while it doesn’t specifically prohibit making payments in response to cyber extortion, it does require disclosure within a short period after the payment.
The Bill is also expected to adopt international standards for connected ‘internet of things’ consumer products such as home security cameras, smartphone-controlled appliances and baby monitors.
The cyber-security Bill forms part of a wide-ranging reform agenda aimed at modernising the law for a digital age, including major reforms to the Privacy Act 1988. These wider aims are discussed in an informative piece from Ashurst.
A new framework for mergers
The Federal Government continues its work towards reform of merger laws, following a consultation period on draft reform legislation.
The Treasury Laws Amendment Bill 2024: Acquisitions establishes a legal structure for new merger rules, including key components such as notification, timelines, the suspensory rule, the competition and public benefit tests, limited merits review and transitional arrangements.
In the meantime, merger parties may continue voluntarily engaging with the ACCC through its informal clearance process until 31 December 2025. From 1 December 2025, it will also be possible to notify voluntarily, prior to compulsory engagement after 1 January 2026. Allens have broken down the likely implications of the consultation process in a recent instalment in their ‘Insight’ series.
Sources of information: Allens, Ashurst, Herbert Smith Freehills, Pinsent Masons, Australian Institute of Company Directors (AICD), Australian Securities Exchange Ltd (ASX).
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.
