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 introduction of a Bill proposing to expand Australia’s anti-money laundering and counter-terrorism financing regime, the passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) through both Houses of Federal Parliament and ASIC issuing interim stop orders on Candy Club Holdings Limited (Candy Club). We also examine applications received by the Takeovers Panel in relation to the affairs of Montu Group Pty Ltd (Montu) and Ringers Western Limited (Ringers Western).
In Over the Horizon, we discuss the Federal Government’s release of a consultation paper on the proposed structure and scope of an initiative aimed at boosting Australia’s battery manufacturing capability.
Regulation
Bill expanding anti-money laundering and counter-terrorism financing regime introduced to Parliament
On 11 September 2024 the Attorney-General of Australia, the Hon Mark Dreyfus KC MP, introduced the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2024 to the House of Representatives which, among other things, aims to ensure that Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) regime can continue to effectively deter, detect and disrupt money laundering and terrorism financing. The Bill’s key objectives are to: (1) extend the AML/CTF regime to certain higher-risk services provided by real estate professionals, professional service providers including lawyers, accountants, and trust and company service providers, and dealers in precious metals and stones; (2) improve the effectiveness of the AML/CTF regime by making it clearer and simpler for businesses to comply with their obligations; and (3) modernise the regime to reflect changing business structures, technologies and illicit financing methodologies. As discussed in G+T’s recent Financial Services Regulatory Recap , the Bill comes after two rounds of consultation and, if enacted, will bring Australia’s AML/CTF regime in line with international standards set by the intergovernmental Financial Action Task Force to address illegal exploitation in the financial sector.
Mandatory climate disclosures and financial market infrastructure legislation passes both Houses
On 9 September 2024, the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 passed both Houses of Federal Parliament. As discussed in a previous edition of Boardroom Brief , once the Bill receives royal assent, the sustainability-related financial disclosure framework adopted by the Australian Accounting Standards Board will be implemented in a phased manner. Under this framework, the largest category of entities will be required to submit sustainability reports (consisting of a climate statement and associated notes, statements and declaration(s)) for financial years commencing from 1 January 2025.
ASIC places two interim stop orders on Candy Club
On 16 September 2024, ASIC issued two interim stop orders on Candy Club following a public offer made under a prospectus lodged on 21 August 2024 in connection with the back door listing of Scalare Partners Pty Limited (Scalare), and a target market determination prepared in connection with that offer at ASIC’s request. ASIC was concerned that: (1) the prospectus did not adequately disclose Candy Club or Scalare’s affairs, including in relation to Scalare’s proposed expansion into the United States; and (2) the target market determination, was deficient under the Corporations Act. The interim stop orders, designed to protect retail investors from potentially investing in offers not suitable for their financial objectives, situation or needs, are valid for 21 days. In that time, ASIC may revoke the orders or impose final stop orders depending on their findings. Directors are reminded that ensuring compliance with the design and distribution obligations is a key focus for ASIC, and ASIC has said it will ‘continue to take regulatory action where warranted and use the design and distribution obligations to improve consumer outcomes’.
Legal
Takeovers Panel receives application in relation to the affairs of Montu Group Pty Ltd
On 9 September 2024, the Panel announced that it had received an application in relation to the affairs of Montu from Mr Wayne Irvine and Mr Shawki Shahin, two shareholders in Montu. The application is the first time the Panel has been called to adjudicate on a control transaction affecting a crowd-sourced equity funded company, and relates to a selective buy-back of shares in Montu which is proposed to be offered to all shareholders in Montu except for MG Invest Limited (MG Invest), which has voting power of approximately 83.7% in Montu. The applicants have raised concerns regarding Montu’s disclosure of the basis for the selective buy-back and the potential for MG Invest’s shareholding to increase above 90%, enabling it to compulsorily acquire the remaining Montu shares. Montu subsequently circulated a Chairman’s letter which contained a summary of an independent valuation of Montu shares, and a scale-back mechanism to prevent MG Invest from acquiring a relevant interest in more than 89.9% of Montu’s shares. The applicants allege that (among other things) there are disclosure deficiencies in relation to the transaction and that an independent expert’s report should be obtained. They further allege that the board of directors of Montu, which is recommending that shareholders vote in favour of the selective buy-back, is not independent of MG Invest, and that there is a conflict of interest between their duties to shareholders as a whole and their duties to MG Invest. The applicants seek final orders that Montu obtain an independent expert’s report in respect of the selective buy-back and provide that report to shareholders for the purpose of any general meeting in relation to the selective buy-back.
Takeovers Panel application received and withdrawn in relation to the affairs of Ringers Western Limited
On 10 September 2024, the Panel announced that an application in relation to the affairs of Ringers Western had been received, and subsequently withdrawn with consent from the President of the Panel. The application originally raised issues in relation to a proposed selective buy-back of shares in Ringers Western, and deficiencies in the notice of meeting and explanatory statement for a general meeting of shareholders in Ringers Western proposed to be convened on 3 September 2024 for the purpose of approving the selective buy-back. The applicants submitted that the selective buy-back was likely to have an effect on the control of Ringers Western due to an increase in voting power of Ringers Western’s largest shareholder (which, at the time of the application, had voting power in 63.31%). A day before the scheduled general meeting, Ringers Western cancelled the proposed selective buy-back and the meeting seeking its approval. The President of the Panel consented to the applicants’ request to withdraw their application.
Over the horizon
Federal Government consults on Battery Breakthrough Initiative
Can Australia develop its own battery manufacturing capability to capitalise on the growing demand for mobile and stationery electricity storage? As discussed in a previous edition of Boardroom Brief , a hallmark of the 2024-25 Federal Budget handed down in May 2024 was the $523 million commitment to promoting battery manufacturing capabilities within Australia, in a bid to commercialise and improve supply chain resilience, and provide opportunities for enhancing Australia’s workforce and economy throughout the renewable energy transition. As part of that broader ‘Future Made in Australia’ policy agenda, on 11 September 2024, the Federal Government handed down a consultation paper co-developed with the Australian Renewable Energy Agency, which provides an overview on the proposed design of the Federal Government’s Battery Breakthrough Initiative. The Initiative proposes to initially focus its support on the production of battery active materials, the manufacture of battery cells and the assembly of battery packs. Public consultation on the Initiative closes on 7 October 2024, with the Australian Renewable Energy Agency looking to launch the Initiative by late 2024 or early 2025.