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 announcement by the Australian Securities and Investments Commission (ASIC) of its focus areas for 30 June 2024 financial reports and a new audit compliance review program, and ASIC’s disqualification of a director for the maximum period of five years for serious misconduct. We also examine three Takeovers Panel media releases in relation to the affairs of Mount Isa Minerals Limited (MIM), Sequoia Financial Group Limited (ASX: SEQ) (Sequoia), and Maronan Metals Limited (ASX: MMA) (Maronan Metals).
In Over the Horizon we examine the Federal Government’s 2025 Budget - including the proposed National Interest Framework and the Critical Minerals Production Tax Incentive.
GOVERNANCE
ASIC announces 30 June 2024 focus areas and audit compliance review program. On 15 May 2024, ASIC announced its focus areas for 30 June 2024 financial reports and a new review of auditors’ compliance with ethical and independence standards to support the regulator’s financial reporting and audit surveillance program. The regulator identified asset values, adequacy of provisions, and subsequent events disclosures as focus areas that apply to all reporting periods. Further, ASIC issued a reminder to directors that, under the Australian Government’s proposed mandatory climate reporting reforms, the first tier of companies is proposed to report for financial years commencing from 1 January 2025. Directors are encouraged to engage closely with these proposed reforms, and to start putting in place necessary governance arrangements. Finally, as part of the regulator’s focus on financial reporting and auditing, ASIC has announced that it will review auditors’ compliance with independence requirements under the Corporations Act 2001 (Cth) and ethical and independence requirements under the Australian Auditing Standards. See ASIC media release .
REGULATION
ASIC disqualifies director for five years for serious misconduct. On 20 May 2024, ASIC announced that it disqualified Mr Laurence Christopher Pereira from managing corporations for the maximum period of five years for serious misconduct that ASIC considered “demonstrated behaviours well below the standard expected of Australian company directors”. Mr Pereira was a director or officer of four companies in the electrical, refrigeration, air-conditioning and mechanical services industries between May 2001 and May 2023, all of which entered liquidation. ASIC found that Mr Pereria failed to ensure that the companies maintained adequate financial records, comply with taxation lodgement obligations and pay employees entitlements, transferred company assets for no consideration and without paying creditors, improperly used his position to gain a personal advantage, permitted two of the companies to trade while insolvent, and failed to apply for a director identification number within the statutory timeframe. See ASIC media release .
LEGAL
Takeovers Panel declines to conduct proceedings in relation to the affairs of Mount Isa Minerals Limited. On 15 May 2024, the Panel announced that it had declined to conduct proceedings on application from Lantech Developments Pty Ltd (Lantech) concerning the affairs of MIM. Lantech had alleged that two directors of MIM and a shareholder of MIM were associates, and were acting to the exclusion of other shareholders to change the composition of the Board and management of MIM. The Panel held that Lantech did not provide a sufficient body of material to justify further enquiry into determining whether the relevant directors and shareholder were associates. Consequently, the Panel concluded that there was no reasonable prospect of declaring unacceptable circumstances and therefore declined to conduct proceedings. See Takeovers Panel media release .
Takeovers Panel receives an application from Sequoia Financial Group Limited in relation to its affairs. On 16 May 2024, the Panel announced that it had received an application from Sequoia concerning its own affairs. Sequoia alleges that there are undisclosed associations in relation to its upcoming section 249D meeting to be held on 4 June 2024 that was brought by certain Sequoia shareholders for the removal of two Sequoia directors. Sequoia submits that associated parties of the shareholders are seeking to change the composition of its board and to control or influence the conduct of its affairs have failed to disclose their identity, the extent of their association and their collective voting power. Sequoia also submits that these parties have purchased additional shares, contravening section 606 of the Corporations Act 2001 (Cth) and resulting in a collective voting power above 20%. Sequoia seeks final orders that the alleged associated parties give it a corrective substantial shareholder notice, be disallowed from exercising any of their recently acquired voting rights, and have their recently acquired shares vested in ASIC for sale. At this stage, no decision has been made to appoint a sitting Panel or to conduct proceedings. See Takeovers Panel media release .
Takeovers Panel receives an application in relation to the affairs of Maronan Metals Limited. On 20 May 2024, the Panel announced that it had received an application from Benjamin Pauley in relation to the affairs of Maronan Metals. On 16 May 2024, Maronan Metals announced that it had raised firm commitments from investors to raise $5.65 million by way of a share placement, and would offer eligible shareholders the opportunity to participate under a share purchase plan on the same terms to raise up to an additional $1.5 million. The application to the Panel raises concerns regarding certain trading in Maronan Metals shares prior to this date, and seeks final orders to cancel or amend the placement. A sitting Panel has not been appointed and no decision has been made whether to conduct proceedings. See Takeovers Panel media release .
OVER THE HORIZON
Federal Government hands down hotly anticipated 2024-2025 Federal Budget. 14 May 2024 saw the Commonwealth Treasurer, Dr Jim Chalmers, hand down the Federal Budget for 2024 - 2025. A key component is the Future Made in Australia Act , which will see about $22.7 billion in investment into renewables and critical minerals over 10 years in a concerted bid to establish Australia as a renewable energy superpower. The Future Made in Australia Act will involve the establishment of a new National Interest Framework to assist the Federal Government to identify priority industries and projects for investments across two streams: the Net Zero Transformation Stream and the Economic Security and Resilience Stream - both of which are critical to Australia's resilience and supply chain management. Further, the Budget involves a proposed Critical Minerals Production Tax Incentive, offering a 10% incentive on processing and refining costs for 31 critical minerals. The incentive will be available for up to 10 years per project, covering production for specific years between 2027 to 2028, and 2039 to 2040 for projects that reach final investment decisions (FID) by 2030. See Treasury media release . As discussed in a recent G+T Knowledge article , while the incentive will provide a useful fillip for current integrated producers, there is a question mark over how effective it will be to incentivise the construction of additional downstream processing capacity. The incentive also does not assist upstream producers struggling with cost inflation and heavy regulation. Time will tell whether the Budget really will deliver a “future made in Australia”.