In this edition, we discuss the release of updated Cyber Security Governance Principles by the Australian Institute of Company Directors (AICD) and the Cyber Security Cooperative Research Centre (CSCRC), the Court’s use of a ‘curing’ provision to extend meeting deadlines, the $1.25 million penalty issued to a former director for operating unregistered investment schemes, the charging of a former director for making false statements to the Australian Securities and Investments Commission (ASIC), and the claim by the Australian Competition and Consumer Commission (ACCC) against Webjet Marketing Pty Ltd (Webjet) for false and misleading representations.
In Over the Horizon, we discuss the passage of the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Cth) through Parliament and its potential impact on mergers and acquisitions going forward.
Governance
Cyber Security Governance Principles refreshed to address evolving risks
On 25 November 2024, the AICD and the CSCRC released updated Cyber Security Governance Principles to address emerging issues such as digital supply chain risks, data governance and effective cyber incident response and recovery. Since October 2022, the Principles have been a key resource for Australian companies in their management of cyber risks. The release of the updated Principles is timely, given the passing the Cyber Security legislative package (including Australia’s first standalone cyber security statute) on 25 November 2024, which is discussed further in our Insight article.
Legal
Court uses ‘curing’ provision to extend Global Lithium Resources Limited’s AGM and EGM deadlines
On 26 November 2024, the Supreme Court of Western Australia published the reasons for Justice Hill’s decision to make orders extending the time fixed under the Corporations Act 2001 (Cth) (Corporations Act) for Global Lithium Resources Limited to call and hold an extraordinary general meeting and its annual general meeting. Section 1322(4)(a) of the Corporations Act is commonly relied upon to cure inadvertent corporate governance failings. However, as discussed in our recent Insight article, the decision illustrates that section 1322(4)(d) can also be used in anticipation of what would otherwise be a future breach of the Corporations Act, provided that no substantial injustice has been or is likely to be caused to any person – with delay in holding a shareholders’ meeting unlikely to itself cause such injustice.
Former director issued $1.25 million penalty for operating unregistered managed investment schemes
On 27 November 2024, the Federal Court ordered that the sole director of The A Team Property Group Pty Ltd, Mr Sasha Hopkins, pay a $1.25 million penalty and banned him from managing corporations for four years in connection with the operation of unregistered managed investment schemes. Mr Hopkins and his company promoted joint venture property developments on social media and offered fixed returns of 25% to 50% to be paid between 12 to 26 months. Investor losses totalled $27 million across 217 participants, many of whom were found by the Court to be inexperienced investors. As discussed in a previous edition of Boardroom Brief, ASIC has announced that targeting unethical property investment schemes will be an enforcement priority for 2025. The $1.25 million penalty is one of the largest ordered against an individual in proceedings commenced by ASIC.
ACCC brings false and misleading representations claim against Webjet
On 28 November 2024, the ACCC announced that it had commenced proceedings in the Federal Court of Australia against Webjet for allegedly making false and misleading representations to consumers about flight prices and bookings. The ACCC alleges Webjet breached the Australian Consumer Law when (among other things) it made ongoing statements across various marketing materials about the minimum price of airfares that omitted compulsory fees charged by Webjet between 2018 to 2023. ACCC Chair, Ms Gina Cass-Gottlieb, notes that the “ACCC is currently prioritising consumer and competition issues in the aviation sector as well as conduct in the digital economy”. The ACCC is seeking pecuniary penalties, declarations, injunctions, consumer redress, costs and other orders, and warns businesses and reminds them of the need to comply with the Australian Consumer Law by not misleading consumers and displaying prices (including hidden fees) clearly.
Over the horizon
Merger reforms legislation passes through Parliament
On 28 November 2024, the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Cth) was passed unamended through Parliament, initiating significant reform of Australia’s mergers and acquisitions framework over the next two years. This process will transition the longstanding voluntary informal clearance process to a mandatory and suspensory notification regime, requiring parties to notify the ACCC of any mergers that meet specific monetary value thresholds. There will be safe harbour protections for some transactions involving listed entities, and the ACCC is expected to provide a process for parties to apply for a notification waiver in particular circumstances. Parties will no longer be able to challenge the merits of an ACCC merger review decision before the Federal Court and will have to rely on limited merits review by the Australian Competition Tribunal. The new regime represents the most significant rewrite of trade practices legislation in decades and will put considerable pressure both on competition compliance arrangements and the administrative capabilities of the ACCC. ACCC Chair Ms Gina Cass-Gottlieb, notes that the ACCC will “be … consulting with … stakeholders to ensure parties have clarity on timeframes and processes, and that the new regime achieves its intended benefits of increased efficiency and transparency”. The regime will come into effect from 1 January 2026, but parties will be able to opt in to the new regime from 1 July 2025. For a more in-depth explanation of the key aspects of the new regime, see our recent Insight article.