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 banning of a former director of Maxi EFX Global AU Pty Ltd (EuropeFX) by the Australian Securities and Investments Commission (ASIC) person and the legal proceedings commenced by the regulator against COFCO International Australia Pty Ltd and COFCO Resources SA (collectively, COFCO) for alleged market manipulation. We also discuss a report published by ASIC on the “cleanliness” of Australia’s equity markets, the release of draft legislation by the Federal Government in relation to the new mergers regime and the Takeovers Panel’s decision to decline to conduct proceedings in relation to the affairs of Maronan Metals Limited (ASX: MMA) (Maronan Metals).
In Over the Horizon, we examine the topic of media leak regulation in Australia and whether a form of the United Kingdom’s (UK) ‘put up or shut up’ rule is required to maintain investor confidence.
Regulation
ASIC bans former EuropeFX director for failure to act as a fit and proper person
On 25 July 2024, ASIC announced that it had commenced civil penalty proceedings in the Federal Court of Australia against COFCO, part of the Chinese state-owned agribusiness conglomerate, for allegedly manipulating the ASX24 market for Eastern Australia Wheat futures contracts. ASIC alleges that COFCO manipulated contracts on 34 occasions between 17 January and 3 March 2022 by placing orders just before the close of the ASX24 with the improper purpose of impacting the daily settlement price of contracts (known as ‘marking the close’), and thereby created an artificial price for those contracts. ASIC Chair, Mr Joe Longo noted that this action demonstrates the regulator’s commitment to responding to market manipulation and warned that ASIC ‘will not hesitate to take action against those manipulating [Australia’s] markets’ .
ASIC commences proceedings against COFCO for alleged market manipulation
ASIC report reveals the cleanliness of Australia’s equity markets
On 24 July 2024, ASIC announced the publication of Equity market cleanliness snapshot report 786 , which provides insight into the “cleanliness” of Australia’s equity markets. The report reveals that Australia’s equity markets operate with a high level of integrity and remain among the cleanest in the world measured by reference to abnormal trading in and around corporate actions. Notably, Australia’s listed equity markets had a low percentage of anomalous trading during the review period of 1 November 2018 to 30 April 2024, and two periods of deterioration (during the COVID-19 pandemic, and in late 2023 as corporate activity increased) were only temporary. The report stresses that all market participants have a role to play to support market cleanliness. Directors are particularly reminded of the importance of implementing robust policies and procedures for the handling of confidential and/or market-sensitive information around major corporate actions such as capital raisings and M&A activity.
Federal Government releases draft legislation on new mergers regime
On 24 July 2024, the Treasurer, Dr Jim Chalmers, announced the Federal Government had released its exposure draft of the Treasury Laws Amendment Bill 2024: Acquisitions in relation to the new mergers regime, which will commence from 1 January 2026 subject to passage through Parliament. The new mergers regime is purportedly targeted at making Australia’s mergers system as ‘clear and consistent as possible for the private sector and community’. One major feature of the exposure draft is a focus on acquisitions where the acquiring person is taken to ‘control’ the target if the acquiring person has the ability to materially influence the acquired business or is capable of affecting the competitive structure of a market (whether or not the acquiring person does, or does not, have a voting power of 20% or more). More key features including the review timeframes are discussed in a G+T Knowledge article . Submissions on the draft legislation close on 13 August 2024. Treasury will consult on the notification thresholds later this year.
Legal
Takeovers Panel declines to conduct proceedings in relation to the affairs of Maronan Metals
On 29 July 2024, the Panel published its reasons for its decision to decline to conduct proceedings in relation to the affairs of Maronan Metals. As discussed in a previous edition of Boardroom Brief , the application was brought by Mr Benjamin Pauley, a shareholder in Maronan Metals, in respect of certain trading in Maronan Metals shares by Veritas Securities Limited (Veritas) prior to the announcement by Maronan Metals of a placement and share purchase plan. The Panel found that there was a lack of a sufficient body of material to support Mr Pauley’s allegations that Veritas had engaged in market manipulation or to justify making further enquiries in relation to alleged associations, and noted that ‘it is not a proper use of the Panel’s processes to use the Panel as a means to gain access to further information or the publicise a theory by making unsupported allegations’ . The Panel further noted that it had been made aware of public comments made by Mr Pauley on Hot Copper, Reddit and Youtube during the proceedings, which the Panel considered to constitute ‘a flagrant contravention’ of media canvassing restrictions.
Over the horizon
The advent of media leak regulation in Australia?
The recently terminated $75 billion proposal by BHP Group Ltd for Anglo American plc has revived the debate about whether the UK’s ‘put up or shut up’ rule should apply in Australia. The rule gives a potential bidder about 28 days from media reporting on a potential deal to publicly announce a formal intention to make, or not make, a bid (and, if they fail to act, to withdraw for six months). In the UK, a ‘leak’ identifying a potential bidder would start the clock on a bidder to make a formal response, which would set off the countdown as BHP was dual-listed in the UK and Australia. In Australia, under the Corporations Act 2001 (Cth), a person who makes a public proposal has two months to make a formal offer. In a recent article , ASIC Chair, Mr Joe Longo raised the prospect of the introduction of such a rule in Australia as a means of strengthening market integrity. Considering the status of Australia’s equity markets and ASIC’s intention to remain at the forefront of Australia’s international peers on market integrity, such a concept could be beneficial in maintaining investor confidence while reducing the period in which potential targets must operate under the cloud of ownership uncertainty.