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 updated guidance for carbon market participants issued by the Australian Securities and Investments Commission (ASIC), the unsuccessful appeal by Australia and New Zealand Banking Group Limited (ANZ) against a judgment that it breached continuous disclosure laws, and the withdrawal of an application to the Takeovers Panel in relation to the affairs of Namoi Cotton Limited (NAM).
In this week’s Over the Horizon, we discuss the upcoming inaugural Global Nature Positive Summit, an initiative that aims to inform the design of activities to repair and regenerate Australia’s natural environment by bringing together various actors from public and private sectors.
Regulation
ASIC updates guidance to assist carbon market participants to understand their financial services licensing obligations
On 30 September 2024, ASIC published an updated guidance for carbon market participants in Regulatory Guide 236 ' Do I need an AFS licence to participate in carbon markets ?' As discussed in a previous G+T Knowledge article , under the reforms to the Emissions Reductions Safeguard Mechanism that commenced on 1 July 2023, “responsible entities ” may generate Safeguard Mechanism Credits (SMCs) from January 2025, which are regulated as a financial product under the Corporations Act 2001 (Cth). The updated guidance aims to assist carbon market participants to determine which activities involve providing a financial service, such as providing financial product advice, or dealing in emissions units regulated as financial products, including Australian Carbon Credit Units (ACCUs) and SMCs. Specifically, the updated guidance addresses the Safeguard Mechanism reforms and reflects changes to the ACCU scheme that have occurred since Regulatory Guide 236 was last issued. ASIC frequently issues media releases in relation to its latest enforcement activity, which are a regular reminder to all market participants of the importance of understanding and complying with Australia’s financial service licencing laws.
Legal
Full Federal Court dismisses ANZ appeal against decision in continuous disclosure case
On 2 October 2024, ASIC announced that the Full Federal Court dismissed an appeal by ANZ against a judgment that it breached continuous disclosure laws when undertaking a $2.5 billion institutional share placement in 2015. As discussed in a previous edition of Boardroom Brief , on 8 December 2023, the Federal Court ordered that ANZ pay a penalty of $900,000 for breaching its continuous disclosure obligations by failing to notify the ASX that approximately $754-791 million of the total amount raised under a $2.5 billion share placement was to be acquired by underwriters rather than investors. Justice Lee noted that entities must disclose relevant information as soon as they become aware and “cannot adopt a ‘wait and see’ approach ” until they obtain more information. ANZ’s appeal was dismissed and it was ordered to pay ASIC’s costs of the appeal. The decision is an important reminder of the potentially onerous operation of continuous disclosure obligations even in circumstances where robust governance systems are in place.
Takeovers Panel application withdrawn in relation to the affairs of Namoi Cotton Limited
On 3 October 2024, the Panel consented to a request by Louis Dreyfus Company Melbourne Holdings Pty Ltd (LDC) to withdraw its application to the Panel dated 18 September 2024 relating to the affairs of NAM. As discussed in a previous edition of Boardroom Brief , NAM had been the subject of two off-market takeover bids - one by LDC, and the other by a major shareholder of NAM, Olam Agri Australia Pty Ltd’s (Olam). LDC’s view was that Olam’s entry into binding deeds with two major shareholders, Samuel Terry Asset Management Pty Ltd (ATF Samuel Terry Absolute Return Fund) (STAM) and Harvest Lane Asset Management Pty Ltd, to acquire a blocking stake of 7.92% of NAM, led to Olam’s relevant interest in NAM increasing to 16.34% (which LDC submitted amounted to unacceptable circumstances). LDC sought to withdraw its application after (among other events): (1) Olam and STAM agreed to terminate their arrangements with NAM; (2) STAM accepted into LDC’s increased unconditional off-market takeover offer in respect of NAM; (3) Olam announced that it would not extend its off-market takeover offer in respect of NAM beyond its current closure date of 8 October 2024, and (4) Olam undertook to accept the increased LDC offer. The Panel will publish its reasons for the decision to consent to the withdrawal in due course.
Over the horizon
Australia’s economy - dependent on protection of the environment?
Australia will host the world’s first Global Nature Positive Summit in Sydney on 8 to 10 October 2024. The two-day summit, arranged through the Commonwealth Government’s Department of Climate Change, Energy, the Environment and Water, is expected to bring together Australia’s leaders across government, corporate sectors, research and environmental organisations and Indigenous Peoples, in a bid to accelerate action to boost private sector investment to protect and repair Australia’s environment. The Summit comes at a crucial time, with increased international focus on the risk of economic damage through biodiversity loss and ecosystem collapse. A joint media release from the Australian Institute of Company Directors, the Australian Council of Superannuation Investors and several other Australian business, finance, investor and civil society groups, suggests that “understanding organisational impact and dependence on nature and biodiversity must be the entry point for business and investors ”, and that “Australia is grappling with the inter-dependence of a strong national economy with a healthy natural environment ”. The release notes that roughly half of Australia’s GDP is moderately or highly dependent on nature and its services, either directly or indirectly through supply chains. The Federal Government has now published its National Biodiversity Strategy and Action Plan , ahead of the Summit. The Summit is noteworthy in that it fills an otherwise largely unoccupied space in Australia’s fiscal policy agenda, although at present it is unclear how targets will be meaningfully measured and reached, and there are mounting concerns from business at the potential impacts of yet more environmental regulation. At the very least, we would expect some level of environmental law reform, which could have a flow on effect on corporate permitting and reporting requirements.