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 public consultation commenced by the Australian Securities and Investments Commission (ASIC) in relation to its draft regulatory guide on the sustainability reporting regime, charges against the former Chief Executive Officer of the Metigy group of companies for misleading investors and misuse of his position as director, proceedings commenced by the Australian Competition and Consumer Commission (ACCC) against Magnamail Pty Ltd (Magnamail) and an increase to penalty rates across all Commonwealth legislation.

In Risk Radar, we discuss what impacts President-elect Trump’s re-election might have on the Australian market.

Regulation

ASIC consults on sustainability reporting regulatory guide

On 7 November 2024, ASIC released a draft regulatory guide on the sustainability reporting regime for consultation with stakeholders. The draft regulatory guide provides ASIC’s views on who must prepare a sustainability report, how the regime will interact with existing legal obligations and how ASIC will administer the sustainability reporting requirements (including the regulator’s approach to granting relief from the regime and the use of its new directions power). It also addresses specific issues in relation to the contents of a sustainability report and sustainability-related disclosures outside the sustainability report. The new sustainability reporting regime will come into effect for the largest category of entities for financial years commencing from 1 January 2025. ASIC is seeking feedback on the likely compliance costs, effects on competition and any other costs and benefits associated with the introduction of sustainability reporting requirements. Submissions close on 19 December 2024.

Legal

Former CEO of Metigy charged with misleading investors and dishonestly using his position as a director

On 8 November 2024, ASIC announced that Mr David Fairfull, the former Chief Executive Officer of Metigy, an artificial intelligence marketing company, had been charged with making false and misleading statements and dishonestly using his position as director to gain an advantage in contravention of the Corporations Act. ASIC alleges that Mr Fairfull provided false information about the revenue and income of the Metigy group of companies to potential investors and further used his position as a director to obtain a loan for his own personal benefit, reportedly used to purchase two luxury homes. ASIC referred the matter for prosecution by the Commonwealth Office of the Director of Public Prosecutions. ASIC Deputy Chair, Ms Sarah Court, noted “ASIC took this case as directors’ duties are an enduring priority for us. Company directors play an integral role in overseeing governance in addition to both performance and compliance and as such have a responsibility to act with integrity and honesty”.

ACCC commences proceedings against Magnamail for alleged misrepresentations

On 8 November 2024, the ACCC announced it had commenced proceedings in the Federal Court of Australia against Magnamail and its parent company for allegedly making false or misleading statements in relation to “pre-draw” promotions in Magnamail’s mail order catalogues. Magnamail is a direct mail order catalogue business operating in Australia and New Zealand that sells a range of merchandise through catalogues it distributes to the public. The ACCC alleges that, between 9 May 2022 and 7 July 2023, Magnamail made false or misleading statements to consumers to the effect that they would be eligible for various prizes if they ordered products from its mail order catalogue and further alleges that Magnamail’s parent company was knowingly involved in this conduct. The ACCC is seeking declarations, penalties, costs, injunctions and other orders.

Commonwealth penalty unit increased

On 7 November 2024, the Crimes and Other Legislation Amendment (Omnibus No. 1) Act 2024 (Cth) commenced, amending the Commonwealth penalty unit pursuant to the Crimes Act 1914 (Cth), among other things. This penalty unit, which is the amount of money used to calculate the pecuniary penalty applied for contravening Commonwealth laws, has now been increased from $313 to $330. The next scheduled review date is 1 July 2026.

Risk radar 

President Trump in – Australian trade potentially out? 

On 6 November 2024, Donald Trump became President-elect of the USA for the second time. With the support of a Republican congress, the new President is expected to move quickly to implement his “America First” agenda with potentially wide-ranging ripple effects on the broader global economy. Of immediate concern to Australian exporters is the spectre of steep tariffs on all imports into the United States from which Australia stands to suffer especially given the United States’ place as Australia’s fifth largest export market. Of potentially greater impact is an accelerated trend towards “de-Globalisation”, with other nations following suit in what could become a global trade war, exacerbating inflationary pressures and potentially crimping GDP growth in Australia (given exports accounted for 48% of GDP in 2023). In the short term at least, despite the memories of the chaos that accompanied Trump’s first term in office, markets seem content to speculate that clear Republican control of both the White House and congress bodes well for business, with a general “risk on” trade in equities and cryptocurrency (to which Trump is known as an enthusiastic convert). Time will tell.