This is a service specifically targeted at the needs of busy non-executive directors (NEDs). We aim to give you a ‘heads up’ on the things that matter for NEDs in the week ahead - all in two minutes or less.
In this edition, we discuss the release of the Director Sentiment Index Survey for the first half of 2024 by the Australian Institute of Company Directors (AICD) and new foreign investment legislation seeking to boost domestic housing supply. We also examine recent civil proceedings commenced by the Australian Securities and Investments Commission (ASIC) in the Federal Court in relation to a regulatory crackdown on crypto-related products.
In Over the Horizon, we examine the Government’s proposed reforms for merger control in Australia.
GOVERNANCE + REGULATION
AICD publishes Director Sentiment Index Survey for the first half of 2024. On 10 April 2024, the AICD published its Directors Sentiment Index Survey for the first half of 2024, which reports on the results of an online survey of 1,087 company directors. The Survey indicates continuing negative sentiment among company directors regarding the state of business conditions in Australia (for the fourth consecutive survey). The top four economic challenges facing Australian businesses, as voted by directors, are the cost of living (40%), labour shortages (35%), productivity growth (33%), and inflation and interest rates (28%). The survey also reports that tight monetary policy is a key factor in the current business environment, with 41% of directors believing that the Reserve Bank of Australia’s current interest rate settings are having a negative impact on business, 78% stating that further interest rate rises would having a damaging effect on the economy, and 68% believing that an interest rate cut would have a positive effect. The survey also revealed that 57% of directors believe that compliance and regulation is the main factor affecting their board’s risk appetite, while 43% are not confident in their company’s governance regime in managing AI opportunities and risks. See AICD media release and Director Sentiment Index Survey .
Amendments to foreign investment laws to boost housing supply receive Royal Assent. On 8 April 2024, the Foreign Acquisitions and Takeovers Fees Imposition Amendment Act 2024 (Cth) (Act) came into force, amending existing foreign investment laws to: (a) triple foreign investment fees for the acquisition of established dwellings; and (b) double vacancy fees for established and new residential dwellings for vacancy years commencing on or after 9 April 2024. The federal Treasurer, Dr Jim Chalmers, stated in a media release on 7 February 2024 that these changes are part of the Government’s agenda to improve housing affordability and supply, including by encouraging foreign nationals to invest in new developments rather than existing dwellings. See Foreign Investment Review Board media release and Treasury media release .
LEGAL
Federal Court appoints receivers over digital currency assets of blockchain mining companies. On 12 April 2024, ASIC announced it had commenced civil proceedings against blockchain mining companies NGS Crypto Pty Ltd, NGS Digital Pty Ltd and NGS Group Ltd (collectively, the NGS Companies) and the three sole directors of those respective companies, Mr Brett Mendham, Mr Ryan Brown and Mr Mark Caten. On 10 April 2024, the Federal Court made orders appointing receivers over the digital currency assets of the NGS Companies and the directors. ASIC alleges that the NGS Companies targeted Australian investors to invest in blockchain mining packages, encouraging some 450 Australians to invest approximately US$41 million. ASIC alleges that each of the NGS Companies contravened section 911A of the Corporations Act by purporting to provide financial services without an Australian financial services licence. ASIC Chair Joe Longo noted these proceedings send a message that crypto-related products will ‘continue to be scrutinised by ASIC to ensure they comply with regulatory obligations in order to protect consumers’. While enforcement action in relation to crypto-related products is one of ASIC's current focus areas, ASIC's action serves as a reminder to all directors of the importance of regulatory compliance in relation to all consumer-facing financial products. See ASIC media release .
OVER THE HORIZON
Enhancing economic competitiveness through merger reforms. On 10 April 2024, the Federal Government published its much anticipated Merger Reform: A Faster, Stronger and Simpler System for a More Competitive Economy . The reforms to Australia’s merger rules are designed to ‘simplify and speed up the process for mergers that are in the national interest’ which, subject to the passage of legislation, will apply from 1 January 2026. Key changes include: (1) the conversion of Australia’s merger process from a voluntary regime to a mandatory and suspensory process - with parties prevented from completing a transaction unless the Australian Competition and Consumer Commission (ACCC) has cleared the deal; (2) faster ACCC decision making times for merger approval - with the opportunity for a ‘fast track’ time frame; (3) allowing a merger to proceed unless the ACCC ‘reasonably believes’ it would have the effect of substantially lessening competition; (4) increased transparency - by requiring the ACCC to publish its reasons for decision and findings of fact; (5) the development of merger notification thresholds; and (6) the expansion of the competition test to include consideration of ‘market position’. See Treasury media release and G+T Knowledge article . The proposed reforms have been welcomed by the ACCC. However, as the Business Council of Australia has warned, there is still a lot of detail to be worked out, and some have already voiced concerns that the changes will add further red tape to business. See Business Council of Australia media release . Treasury will consult on exposure draft legislation to implement the proposed reforms later in the year.