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In this edition, we discuss a speech in which the Chair of the Australian Securities and Investments Commission (ASIC), Mr Joe Longo, encourages entities to prepare for reporting obligations under the mandatory climate disclosure regime and the charges faced by a former director for allegedly breaching his duties as a director and making false statements to ASIC. We also examine the decision of the Takeovers Panel to decline to conduct proceedings on a review application regarding the affairs of Vintage Energy Limited (ASX: VEN) (Vintage), and an application received by the Takeovers Panel in relation to the affairs of Ringers Western Limited (RWL).
In Over the Horizon, we examine the Australian productivity slump rampant across corporate Australia and how the use of artificial intelligence (AI) may aid in rectifying this issue.
GOVERNANCE
ASIC Chair strongly encourages entities to prepare for mandatory climate disclosure regime. On 23 April 2024, ASIC Chair Mr Joe Longo presented a speech at the Deakin Law School International Sustainability Reporting Forum in which he strongly encouraged entities to begin putting in place the systems, processes and governance practices required to meet requirements under the proposed mandatory climate disclosure regime. Mr Longo urged compliance with the voluntary TCFD framework as a means of placing entities in good stead for the introduction of the mandatory regime. Mr Longo further indicated that ASIC would take a “pragmatic approach ” to enforcement, noting that there will be a period of transition as industry builds the capability required to meet these new disclosure obligations. He also reiterated that the new reporting requirements will assist entities to take advantage of climate-related opportunities, despite being an additional reporting burden, and that ASIC will publish further guidance and resources to assist entities to manage their reporting obligations. See ASIC media release .
Former director charged with breaching directors’ duties and making false statements to ASIC. On 22 April 2024, Mr Benjamin Thomas Molloy appeared at the Melbourne Magistrates Court charged with one count of breaching his director’s duties and five counts of making false statements to ASIC. It was alleged that, between 17 September 2019 and 1 July 2021, Mr Molloy misused his position as a director of Consult Cloud Pty Ltd (in liquidation) by causing the proceeds from the sale of a motor vehicle asset to be redirected to another company of which he was a director, and that he made five false statements in forms lodged with ASIC. The matter has been adjourned to 15 July 2024 for a committal mention. See ASIC media release .
LEGAL
Takeovers Panel declines to conduct proceedings in relation to a review application regarding Vintage Energy. On 26 April 2024, the Takeovers Panel announced that it had declined to conduct proceedings in relation to an application by Keybridge Capital Limited (Keybridge), a substantial shareholder in Vintage, in relation to the affairs of Vintage. This application (and its previous initial application discussed in a previous edition of Boardroom Brief ), concerned a $8 million capital raising (comprising a $1.3 million placement and a $6.7 million accelerated non-renounceable entitlement offer) that Keybridge argued was excessive, resulted in an unacceptable change of control, and constituted an unacceptable frustration of Keybridge's section 249D notice. The review Panel considered that there were limited circumstances in which Vintage’s equity raise could have a control effect, and that Vintage’s incorporation of a dispersion strategy including a top up facility and the appointment of a professional underwriter and sub-underwriters mitigated the potential control effect. The review Panel therefore concluded that there was no reasonable prospect that it would make a declaration of unacceptable circumstances and declined to conduct proceedings. See Takeovers Panel media release .
Takeovers Panel receives application in relation to the affairs of Ringers Western Limited. On 29 April 2024, the Panel received an application from various minority shareholders of RWL (Applicants) in relation to the affairs of RWL. By way of background, on 19 February 2022, RWL entered a share sale deed with the trustees for the Ringers Western Discretionary Trust (RW Trust) to acquire 100% of the shares in Ringers Western Pty Ltd. On 19 March 2022, RWL entered a bonus share deed with the RW Trust (Bonus Share Deed) providing that, among other things, RWL would issue a certain number of shares in RWL to the RW Trust if an exit event, such as an initial public offering or a 100% sale, did not occur within 24 months after completion under the share sale deed. On 2 April 2024, RWL issued shares to RW Trust purportedly in connection with the Bonus Share Deed (Bonus Shares), resulting in RW Trust’s shareholding in RWL increasing from 63.31% to 99.94%. The Applicants submit that, among other things, the acquisition of Bonus Shares by the RW Trust contravened section 606(1) of the Corporations Act 2001 (Cth) and the circumstances are unacceptable having regard to the effect they have on the control of RWL (including because the acquisition of Bonus Shares by the RW Trust was a de facto takeover of RWL) and the acquisition of the Bonus Shares did not take place in an efficient, competitive, and informed market. A Panel has not been appointed and no decision has been made on whether to conduct proceedings. See Takeovers Panel media release .
OVER THE HORIZON
AI: an aid to Australia’s productivity crisis? Corporate Australia is witnessing and grappling with a fall in productivity growth to a 60-year low, with ‘no time to waste in stimulating Australian output’ (see article ). Recent efforts to address the malaise have included the Australian Government’s White Paper on Jobs and Opportunities published in Q4 2023 - see, in particular, Chapter 4 titled Reigniting Productivity Growth (see chapter). It has been suggested that thoughtful implementation of generative AI into corporate environments may provide an immediate productivity boost (see). Directors are urged to consider four pivotal questions when evaluating generative AI initiatives to unlock tangible productivity benefits: (1) how can generative AI enrich our employees’ experiences? (2) how can generative AI help us engage with our customers more effectively? (3) how can generative AI enable us to reshape our business processes? and (4) how can generative AI help us innovate in substantially different ways?