Welcome to the first edition of Boardroom Brief for 2025. 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 a few minutes.
In this edition, we discuss Treasury’s proposal to combine the functions of various financial reporting standards institutions and the publication of guides on competition considerations for sustainability collaborations and how directors can leverage circular economy principles. The Takeovers Panel had a busy summer, and we also discuss various announcements and decisions concerning the affairs of Global Lithium Resources Limited (ASX: GL1) (GL1), Keybridge Capital Limited (ASX: KBC) (KBC) and Montu Group Pty Ltd (Montu).
In Over the Horizon, we discuss the regulatory issues that will be in the sights of the Australian Securities and Investments Commission (ASIC) in the year ahead.
Regulatory
Treasury consults on proposed combining of financial reporting standards authorities
On 23 January 2025, Commonwealth Treasurer Dr Jim Chalmers announced the release of the consultation paper titled Positioning Australia’s financial reporting system for the future. The consultation paper seeks feedback on the proposed structure and governance arrangements for a new body responsible for the combined functions of the Australian Accounting Standards Board, the Auditing and Assurance Standards Board and the Financial Reporting Council, with the goal of providing a one stop shop for the development and issuance of standards, including climate-related financial disclosure. The closing date for submissions is 21 February 2025.
ACCC publishes final guide on competition considerations for sustainability collaborations
On 18 December 2024, the Australian Competition and Consumer Commission (ACCC) announced the publication of a final guide to assist businesses collaborating to achieve positive environmental outcomes to consider and understand potential competition law risks. As discussed in a previous edition of Boardroom Brief, the ACCC previously sought public consultation on the draft guide. The final guide, titled Sustainability collaborations and Australian competition law: A guide for business, includes a five-step checklist for businesses to assess whether a proposed collaboration may raise competition concerns.
AICD publishes guide to assist directors to address climate change through business practices
On 28 January 2025, the Australian Institute of Company Directors (AICD) and Accenture jointly published a publication titled Opportunities in the circular economy: A primer for Australian directors, which is designed to introduce directors to circular economy practices as a strategic pathway to address climate change impacts and drive sustainable business success. The guide provides case examples of circular economy initiatives within Australian businesses and sets out reflective questions for directors seeking to adopt similar changes.
Legal
Takeovers Panel declines to conduct proceedings in relation to affairs of Global Lithium Resources Limited and receives review application
On 10 December 2024, the Panel announced that it had received an application from GL1 in relation to its affairs. GL1 submitted that, since February 2024, associated parties, including GL1 director Mr Dianmin Chen, holding between 30-40% voting power in GL1 have: (1) attempted to obtain control of GL1’s board and control its affairs; (2) contravened the takeover provisions of the Corporations Act 2001 (Cth); and (3) failed to fully disclose their association to shareholders. GL1 sought final orders that, among other things, 30.03% of the GL1 shares acquired by the alleged associates be vested in ASIC for sale within 18 months, or alternatively a 3-year voting restriction apply. On 24 January 2025, the Panel announced that it had declined to conduct proceedings on GL1’s application, noting that: (1) the application was not timely, having regard to the significant amount of time since relevant events occurred; (2) there was no reasonable prospect that the Panel would extend time for the application to be made; and (3) there was no reasonable prospect that it would make a declaration of unacceptable circumstances. The Panel subsequently announced on 29 January 2025 that it had received an application from GL1 seeking a review of its decision to not conduct proceedings. A review Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings. The case highlights the evidentiary difficulties often faced by parties seeking to make out the existence of undisclosed associations.
Takeovers Panel declines to conduct proceedings in relation the affairs of Keybridge Capital Limited and the affairs of Benjamin Hornigold Ltd
On 3 February 2025, the Panel announced that it had declined to conduct proceedings on two applications from KBC, one in relation to its own affairs and the other in relation to the affairs of Benjamin Hornigold Ltd (ASX: BHD) (BHD), of which KBC holds a 19.59% interest. On 19 December 2024, WAM Active Limited (which, along with its associates (collectively, WAM), holds a voting power of about 44% in KBC) requisitioned a general meeting of KBC shareholders for 10 February 2025 to replace the board with four new directors, including Mr Sulieman Ravell and Mr Geoff Wilson. KBC submitted that WAM, Mr Ravell, Mr Wilson and BHD director Mr Michael Glennon hold a collective 51% interest in BHD and have been "acting in concert to get control of pivotal assets in Keybridge such as …BHD”. The Panel concluded there was no reasonable prospect that it would make a declaration of unacceptable circumstances, and will publish its reasons for the decision in due course on its website.
Takeovers Panel publishes reasons for its decision to make a declaration of unacceptable circumstances in relation to the affairs of Montu Group Pty Ltd
On 20 December 2024, the Panel published the reasons for its decision in relation to the affairs of Montu. As discussed in a previous edition of Boardroom Brief, the Panel previously made a declaration of unacceptable circumstances, following an application from two shareholders in relation to a selective buyback of those shares in Montu not held by major shareholder MG Invest Limited (MG). The Panel held, among other things, that: (1) Montu and MG had not made sufficient disclosure surrounding the buy-back; (2) Montu had not adequately informed shareholders of the role and makeup of the independent board committee that had overseen the planning of the buy-back; (3) MG’s potential increase in shareholding from 83.7% to 88.8% posed a real possibility of proceeding to compulsory acquisition; and (4) as the only investor whose control would be consolidated by the buy-back, it would be unacceptable for MG to vote on the issue. The Panel accepted undertakings from Montu and MG in lieu of orders, including an undertaking by MG to not initiate compulsory acquisition of shares in Montu without the Panel’s consent.
Over the horizon
ASIC – looking out for the little guy in 2025?
On 24 January 2025, ASIC issued a media release highlighting the most significant current and emerging issues within its regulatory remit in 2025, and consumer protection is – perhaps unsurprisingly – the headline. Superannuation funds will be a magnet for regulatory scrutiny, with ASIC reporting at least $750 billion of funds shifting from the accumulation to the retirement phase in the next 10 years due to an estimated three million Australians becoming eligible to draw down. This impending tidal wave of withdrawals will test super fund compliance measures, with ASIC promising to focus on enforcement action against exploitative misconduct. The continued risk of cyberattacks and data breaches amidst the ongoing digitisation of the financial sector has brought organisations’ risk management frameworks into sharp focus, and ASIC clearly expects directors to ensure that these frameworks promote cyber resilience. Other focus areas include: (1) deficient insurance claim handling leading to poor household outcomes; (2) deficient climate-related financial disclosures causing misinformed investment decisions; (3) poor audit quality driving down market confidence and misinformed investment decisions; and (4) banks and lenders exacerbating consumer financial hardship. As ASIC’s appetite for enforcement action continues to increase, directors of consumer-facing businesses would do well to pay particular attention to the robustness of compliance systems and policies.