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Minter Ellison’s corporate HQ advisory team provides specialist advice for the corporate headquarters of ASX-listed companies on boardroom, management and shareholder relations, and all Corporations Act and ASX Listing Rules issues. Led by pre-eminent corporate lawyer Bob Austin, the team has many years of combined experience advising boards, chairpersons, CEOs, company secretaries, corporate counsel and other senior executives. The breadth of our capability extends beyond corporate and securities expertise to include other relevant areas, such as employment, taxation law and trends in corporate governance practice. This ensures that our corporate HQ advisory team delivers seamless strategic advice for our clients across industry sectors. We advise many leading public and private sector organisations on the full spectrum of corporate governance, including directors’ duties, compliance documentation and commercial, legal and ethical standards. Corporate governance work is often advisory in nature, and in many cases, confidential. Details of significant matters on which we have advised are held in confidence. Our expertise includes directors’ duties and powers, the roles and responsibilities of board members and senior company executives including the chairperson and CEO, board and company meetings, indemnities and insurance, constitutions, corporate structuring, and governance practices of statutory authorities and office holders. We also advise on corporate governance policies and processes, for example, on related party transactions, securities trading, continuous disclosure and diversity. We specialise in preventive strategies to avert corporate governance problems before they arise, for example, through online corporate compliance programs. Our SAFETRAC business provides leading, innovative online compliance programs for areas such as continuous disclosure, directors’ duties and insider trading.
The Corporations Amendment (Phoenixing and Other Measures) Bill 2012 (the Phoenixing Bill) passed the Senate on 9 May 2012, and is currently awaiting Royal Assent.
The Bill amends the Corporations Act to:
The Government introduced this legislation to give effect to its election commitments in relation to phoenix companies and the protection of workers' entitlements (see our previous Alert Bills to battle phoenix activity released for public comment). In this Alert, we update you on the Phoenixing Bill and other developments in phoenix company law reform.
ASIC has successfully appealed to the High Court of Australia against the judgment of the Court of Appeal of New South Wales in the James Hardie litigation. In the result, the trial judge's decision that the non-executive directors and general counsel/company secretary breached their duty of care and diligence has been restored. The decision in ASIC v Hellicar [2012] HCA 17 is important in three ways, concerning:
The High Court's contemporaneous judgment in Shafron v ASIC [2012] HCA 18 provides clarification on the scope of a company officer's position. View our comprehensive report on the High Court's decision of the James Hardie case.
On 18 April the government released for public comment exposure draft legislation for the Tax Laws Amendment (2012 Measures No. 2) Bill 2012: Companies' non-compliance with PAYG withholding and superannuation guarantee obligations. The draft legislation proposes amendments to the current regime in the Taxation Administration Act 1953 (Cth) which imposes personal liability on directors for certain unpaid company tax in some circumstances. Those existing rules are known as the director penalty regime.
On 29 March 2012, ASIC released a report: REP 281 ASIC enforcement outcomes: July to December 2011. The report, which is the first of its kind, identifies 'categories of gatekeeper' against whom enforcement action was taken by the regulator (including directors and officers, financial advisers, responsible entities and their officers, credit licensees, insolvency practitioners, auditors, market participants and officers of registered companies) and highlights examples of particular conduct. The term 'gatekeeper', first popularised by Professor John C Coffee Jr of Columbia University, is now an essential part of ASIC's regulatory strategy. In this Alert, we focus on action taken by ASIC against directors and officers.
Leighton Holdings Limited (Leighton) has paid a total of $300,000 in response to three ASIC infringement notices that alleged non-compliance with its continuous disclosure obligations. Leighton has also given an enforceable undertaking to ASIC that it will conduct an independent review of its disclosure policies and procedures, at its cost. ASIC's enforcement action against Leighton is a vivid reminder that material information must be disclosed to the market immediately if a reasonable person would expect disclosure, even where the information was confidential and generated for internal management purposes. It also demonstrates that ASIC is taking a strong pro-disclosure view when it applies the 'reasonable person' test. ASIC's use of infringement notices (and in this case an enforceable undertaking), rather than legal proceedings, might signal a change in its continuous disclosure regulatory strategy. While ASIC's approach is open to criticism, the Leighton enforcement action should be seen as an immediate prompt to directors of listed entities to ensure that their company's continuous disclosure procedures are structured properly.
Proposed reforms to Division 269 of the Taxation Administration Act 1953 (Cth) (TAA) could extend the potential personal liability on directors to include a company's failure to pay the superannuation guarantee charge, and in some instances, to affect the ability for directors and/or their associates (such as family members) to claim tax credits under the PAYG rules where a company had failed to pay the relevant taxes. The proposed reforms also involve the removal of the director penalty notice requirement for the Australian Taxation Office under Division 269, instead imposing an automatic director liability if the company had not paid the relevant tax within three months of its due date. These reforms are still being considered by the government, and have been controversial – particularly the removal of the director penalty notice and the potential for tax impacts upon associates of directors.
The Business Names Registration Act 2011(Cth) has been passed by the Commonwealth Parliament. The Act will generally make it mandatory for a person carrying on a business in Australia under a business name to register the business name with ASIC and replaces the current state and territory business name registration systems. Subject to the passage of complementary legislation in the Northern Territory and Western Australia the National Business Names registration system will commence on 28 May 2012.
In this edition of Corporate HQ Advisory Newletter, we look at:
The New Zealand High Court decision of Steigrad & Ors v Bridgecorp Limited & Ors (2011) holds that the statutory charge equivalent to section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) in favour of a plaintiff or prospective plaintiff extends to the whole of the limit of liability under a D&O policy, regardless of the directors’ cover for defence costs under that policy. The potential reach of this decision goes beyond D&O policies.
Almost daily, there is amazing news from the United Kingdom on the remuneration of banking executives: huge, controversial bonuses and their subsequent sacrifice by the executives, knighthoods withdrawn and threats of drastic government intervention. New laws are inevitable, but what are they likely to say? Will they influence future corporate law reform in Australia? The focus on UK executive remuneration is especially pronounced for several reasons. One is that the financial and insurance industries contribute a major component of the United Kingdom GDP. Another is that austerity measures introduced by the coalition government and a high unemployment rate have highlighted the discrepancy between executive and worker remuneration.
2011 was a landmark year for listed companies, with the 1 July 2011 commencement of the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 triggering changes in the way that AGMs are conducted. In this article, we review the 2011 season and discuss practical steps you can take for your company's AGM in 2012. (For detailed discussion of the impact of the 'two strikes' rule, please see our article 'Did you receive a strike, or comments, on your remuneration report in 2011?', also in this issue).
Did your listed company receive a 'no' vote of 25% or more on the resolution to adopt the remuneration report (a strike) at its 2011 AGM? Did shareholders make comments on the report at the meeting? If yes, then there are a number of content requirements which your company must include in its remuneration report and notice of meeting for 2012, as well as issues to keep in mind when conducting your next AGM. If no, you still need to be conscious of ways your company can minimise the risk of receiving a strike in 2012, and there are some new reporting obligations that your company still needs to satisfy. In this article, we look at practical steps you can take to ensure compliance with the new requirements introduced to the Corporations Act by the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011, and to successfully navigate this new terrain of company-shareholder relations.
David Bradbury (Parliamentary Secretary to the Treasurer) has announced further reforms to Australia's executive remuneration reporting framework, to be released for public consultation in the second half of 2012. The proposed reforms will:
These reforms are the latest in a series of post GFC responses to community concerns regarding the level of executive remuneration and follow the 2009 changes to the approval thresholds for termination payments, 2010 introduction of new remuneration standards for Australian financial institutions and the 2011 introduction of the two strikes rules regarding the advisory resolution in respect of the remuneration reports of listed companies.
The Parliamentary Secretary to the Treasurer, David Bradbury, released an exposure draft of the Personal Liability for Corporate Fault Reform Bill 2012 (Liability Reform Bill) on 27 January 2012. This is the first tranche of proposed legislation issued by the Commonwealth Government to fulfil its commitments under the Council of Australian Governments' directors' liability reform project, which aims to harmonise the approach of all Australian jurisdictions to personal criminal liability for corporate fault. The Liability Reform Bill amends Treasury portfolio legislation (excluding tax legislation) to 'ensure that where legislation imposes derivative liability, it is fair and principled and not imposed as a matter of course'. The most significant amendments are to Corporations Act 2001 provisions imposing responsibility on company secretaries and directors for a company's contravention of certain Corporations Act administrative and reporting requirements. They are our focus in this Alert.
Exposure drafts of two Bills aimed at reducing phoenix activity were released for public comment on 20 December 2011.The Corporations Amendment (Similar Names) Bill 2012 (Similar Names Bill) will expose directors to personal liability for their company's debts, if:
The Corporations Amendment (Phoenixing and Other Measures) Bill 2012 (Phoenixing Bill) will give ASIC administrative power to order that a company be wound up, generally in circumstances where ASIC considers that the company has been 'abandoned'. This will trigger employees' entitlements under the Government's General Employee Entitlements and Redundancy Scheme (GEERS).Both Bills reflect election commitments in the Protecting Workers' Entitlements package announced in July 2010. But will their proposed measures be effective?
On 9 December 2011, ASIC issued Regulatory Guide 230 Disclosing non-IFRS financial information (RG 230). It sets out ASIC's guidance on when 'non-IFRS financial information' may or may not be used, and what additional disclosure should be made so that the information is not misleading. ASIC recognises that disclosure of non-IFRS financial information, including alternative profit measures, has become increasingly common and can be useful to investors and other users of financial information. The information can be presented in documents such as directors' reports, market announcements, investor briefings and transaction documents, subject to the important proviso that it is not misleading. There are, however, only limited circumstances in which it can be included in financial reports, due to the requirements applying to those reports under the Corporations Act and accounting standards. In this Alert, we look at the guidance and its likely practical effects.
As the annual general meeting season draws to a close, the government has asked the Corporations and Markets Advisory Committee (CAMAC) to consider the future of the company AGM, with particular reference to the risks and opportunities of technology and the significant role of foreign capital in the Australian market. In this Alert, we look at the terms of the reference and its context.
On 1 December 2011 the Supreme Court of New South Wales made orders approving creditors' schemes of arrangement between Centro Properties and CPT Manager and two classes of their creditors, notwithstanding opposition from PricewaterhouseCoopers and class action claimants. The Court's approval, and the statement by PwC in court on the following day that they would not seek to appeal, removed the last substantial obstacle to the implementation of the restructuring of the Centro Group. The Centro Group restructuring is perhaps the most complex corporate workout so far achieved in Australia. In his reasons for decision, Justice Barrett has made important observations about some legal issues that will be pertinent for other restructurings.
The rules about when companies can pay dividends are under review again – last year's amendments raised more questions than they answered and now it is time to fix the mess. On 28 November 2011, Treasury released a discussion paper: Proposed Amendments to the Corporations Act. The Paper seeks public comment by 30 January 2012 on the resolution of issues arising from changes to the Corporations Act made by the Corporations Amendment (Corporate Reporting Reform) Act 2010 (Reform Act), which replaced the profits test for payment of dividends with a balance sheet test.
The Paper sets out a number of proposals, but we think that the option to replace the dividend test with a solvency requirement is clearly the best. Numerous drafting difficulties with the Reform Act should also be corrected. In this alert, we review and comment on the proposals in the Paper.
The ASX released a consultation paper on 5 October 2011, with reform proposals for the public reporting of reserves and resources by mining and oil and gas exploration and production companies, including proposed amendments to the ASX Listing Rules. In this Alert, we look at the proposals and their likely effect.
David Bradbury, Parliamentary Secretary to the Treasurer, released an exposure draft of the Corporations Legislation Amendment (Audit Enhancement) Bill 2011 and explanatory material for public consultation on 30 September 2011. If passed, the Bill will make some important changes to audit procedures and the scope of ASIC’s audit supervision powers. In this Alert, we review the changes and update you on the next steps.
Yesterday, the Consumer Credit and Corporations Legislation Amendment (Enhancement) Bill 2011 (Bill) was introduced into the House of Representatives. If passed, the Bill will amend the Corporations Act 2001 to establish that the chair may lawfully vote undirected proxies on the resolution to adopt the remuneration report. But the proxy appointment must expressly authorise the chair to exercise the proxy, in accordance with a formula stated in the new provision.
In this edition of the Corporate HQ Advisory newsletter, we look at:
Adopting a related party transactions policy helps to establish protocols and procedures for identifying and dealing with related party transactions. We examine the key benefits that can flow to a public company from adopting a related party transactions policy and identify some of the issues that the policy should cover.
The delivery of electronic board papers on iPads is becoming increasingly popular, particularly for non-executive directors. The benefits seem clear and numerous and the obstacles limited, but directors do need to consider a few key issues before going wholly electronic for board communications.
Large companies often have a low shareholder participation rate at their AGMs. Allowing shareholders to take part online from their homes and offices may improve participation rates and shareholder involvement. But does the law permit it? And if it does, what are the issues to keep in mind in achieving it?
From remuneration reports to board limits – the ripple effect of the executive remuneration reforms is starting to be felt this AGM season. What steps can you take to make sure you are up-to-date?
The much-anticipated decision on penalty against the seven directors and former chief financial officer of the Centro Properties Group (CNP) and Centro Retail Group (CER) was handed down by the Federal Court on 31 August 2011: ASIC v Healey & Ors (No 2) [2011] FCA 1003.
In this Alert, we look at Justice Middleton's reasoning and the likely impact of the decision.
At its 19 August 2011 meeting, the Council of Australian Governments (COAG) reached agreement on the next steps in national reform of the laws imposing liability on directors. Following concerns raised by the COAG Reform Council about the manner in which the States and Territories had conducted their respective audits of existing legislation against reform principles agreed by COAG (Agreed Principles) and the implementation plans which the States and Territories had prepared to reform the existing legislation, all States and Territories have now agreed to a review of the current audit outcomes.
An important judgment in the Federal Court has clarified the duties of directors of listed public companies when they consider the company's financial statements. In ASIC v Healey & Ors [2011] FCA 717 (Centro), ASIC brought proceedings against the directors and financial officer of the Centro Group, alleging failure to take all reasonable steps to ensure compliance with the companies' financial reporting obligations under the Corporations Act, and breaches of statutory duties of care and diligence.
Fortescue Metals Group (FMG) made three announcements to the ASX in August and November 2004, regarding some agreements it had made with three Chinese companies for the construction of the company’s mine in the Pilbara, a railway from the Pilbara to Port Hedland, and a port at Port Hedland. The announcements stated that FMG had binding "build and transfer" contracts with the Chinese companies. In March 2005 a newspaper article claimed that the agreements were not binding “build and transfer” agreements.
Yesterday, the Federal Government released the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 (Bill) which, according to the Parliamentary Secretary to the Treasurer, David Bradbury, will give shareholders unprecedented power over the remuneration of company executives.
As we reported in our Corporate HQ Advisory Alert on 22 December 2010, the NSW Court of Appeal's judgment in the James Hardie case was delivered on 17 December 2010.
You may recall that on 24 November 2009, important changes to the retirement benefit provisions in the Corporations Act 2001 (Cth) came into effect (often referred to as the golden handshake provisions).
The new laws capping golden handshakes at one year's base salary commenced yesterday – after the Corporations Amendment (Improving Accountability on Termination Payments) Act received Royal Assent.
Last week, the House of Representatives passed the Corporations Amendment (Improving Accountability on Termination Payments) Bill which - assuming it passes the Senate - will cap golden handshakes at one year's base salary unless shareholder approval is obtained.
On 23 April 2009, Justice Gzell of the New South Wales Supreme Court delivered his judgment in Australian Securities and Investments Commission v Macdonald (No. 11) [2009] NSW SC 287.