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In this edition, we discuss guidance materials published by the Australian Institute of Company Directors (AICD) aimed at assisting board directors in navigating artificial intelligence (AI) adoption and usage, reasons published by the Takeovers Panel (Panel) for its decision not to conduct proceedings on a review application in relation to the affairs of Vintage Energy Limited (ASX: VEN) (Vintage), and reasons published by the New South Wales Court of Appeal about a finding that a signature executed in the capacity of a director can bind a director personally.

In Over the Horizon, we examine the London Metal Exchange’s (LME) rejection of a bid by the Australian Government to have ‘green’ nickel recognised on the LME, and what this might mean for Australian commodities.

Regulation

AICD releases guidance materials to assist boards in navigating AI adoption and use

On 12 June 2024, AICD published a suite of resources to assist directors and boards in navigating artificial intelligence in partnership with the Human Technology Institute at the University of Technology Sydney. The resources were designed to assist directors to maximise the benefits of AI in their organisations, while avoiding the risk of serious harm including consumer impacts, commercial losses, reputational damage, and regulatory breaches. These resources include A Director’s Introduction to AI which lays the foundation for understanding AI concepts, A Director’s Guide to AI Governance which provides boards with practical guidance on using AI in using or implementing AI in their organisation, and SME and NFP governance checklist which sets out suggested steps for AI governance in small and medium-sized enterprises and not-for-profit organisations. See AICD media release, A Director's Introduction to AI, A Director's Guide to AI Governance and SME and NFP governance checklist.

Legal

Takeovers Panel declines to conduct proceedings on review application in relation to the affairs of Vintage

On 14 June 2024, the review Panel published its reasons for declining to conduct proceedings in connection with a review application in relation to the affairs of Vintage. On 17 April 2024, Keybridge Capital Limited (Keybridge), a substantial shareholder in Vintage, brought an application to the Panel seeking a declaration of unacceptable circumstances on the basis that (among other things) a capital raising sought to be undertaken by Vintage was designed to frustrate resolutions at an upcoming requisition meeting. On 1 May 2024, the initial Panel announced it had declined to make a declaration of unacceptable circumstances. Keybridge sought a review of this decision, claiming that the initial Panel had failed to address the ‘prima facie unacceptable circumstances’, and seeking the same final orders as in the initial application. The review Panel considered that the review application did not raise any matters suggesting that a deeper enquiry into the decisions of the directors of Vintage in relation to the rights issue was warranted in the circumstances. Accordingly, the review Panel was of the opinion that there was no reasonable prospect that it would make a declaration of unacceptable circumstances, and decided not to conduct proceedings in relation to the review application. See Vintage Energy Limited 02R [2024] ATP 6.

New South Wales Court of Appeal holds that a signature as a director can bind a director personally

On 7 June 2024, the New South Wales Court of Appeal published its reasons for dismissing an appeal in relation to a dispute over whether a document described as a deed and executed by three companies was effective as a contract that was binding on three individuals. The decision arose from claims stemming from a digital commodity investment fund business and cryptocurrency investments, which went to mediation. The parties reached a settlement and proceeded to prepare a deed of settlement, release and indemnity (Deed) without legal input. The parties then signed the Deed as directors of the relevant companies, and later argued that the Deed was not binding on them in their personal capacities. The Court of Appeal dismissed the appeal and held that, despite the Deed’s flaws, the parties intended to be legally bound and also bound in their personal capacities because (among other things): (1) the Deed was drafted ‘in less than ideal conditions’; (2) it was clear that the common intention was that the individuals would be parties to the Deed and personally bound by it despite the absence of provision for them to sign in their personal capacity; and (3) the parties had not involved their solicitors despite repeatedly being asked by the mediator. See Sinclair v Balanian [2024] NSWCA 144.

Over the horizon

London Metal Exchange rejects Australian Government’s bid to have ‘green’ nickel recognised

A recent article reports on statements by former Prime Minister and now Ambassador to the United States Dr Kevin Rudd, rebuking the LME – the largest base metals trading market in the world – for not recognising a ‘green’ standard of nickel on the exchange. The rejection from the LME comes as a blow to Australian nickel miners and refineries who have struggled to stay afloat amid a flood of cheap nickel sourced from Chinese-backed, Indonesian laterite mines, which has resulted in a 40% drop in nickel prices over the last year. The problem has led to nickel miners such as Wyloo Metals and First Quantum suspending Western Australian operations and to BHP considering whether it should close its nickel business. As discussed in a recent article, perhaps there might be scope for a new "Green Metal Exchange” as an alternative to the LME, to assist Australian metal producers in reaping financial returns for adopting sustainable practices that might otherwise penalise them in a global forum such as the LME. This could facilitate the emergence of the hoped-for ‘green premium’ in metals trading, and potentially improve environmental outcomes by incentivising the mining and refining of green metals.