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 release of the Australian Securities and Investments Commission’s (ASIC) Corporate Plan 2024-25 and the Senate’s approval of a Bill in relation to mandatory climate-related financial reporting and financial market infrastructure. We also examine the application received by the Takeovers Panel in relation to the affairs of AIMS Property Securities Fund (ASX: APW) (APW), and the Panel’s reasons for its decision in relation to the affairs of Sequoia Financial Group Limited (ASX: SEQ) (Sequoia).

In Over the Horizon, we discuss the 'right to disconnect' laws that came into effect on Monday, 26 August 2024.

Regulation

ASIC broadens its strategic priorities for the next 12 months

On 22 August 2024, ASIC announced the release of its Corporate Plan 2024-25 which expands the regulator’s strategic priorities to include Australia’s public and private markets and emerging financial products. ASIC Chair, Mr Joe Longo, stated that this initiative aims to enhance the integrity of the market and maintain public confidence in the Australian financial system. This new pillar of ASIC’s Corporate Plan will involve: (a) reviewing the growth in private markets; (b) supervising the conduct of financial market infrastructure providers; (c) monitoring digital assets, tokenisation and decentralised finance; (d) reporting on market cleanliness; (e) implementing trade reporting rules; (f) implementing competition in clearing and settlement service rules; and (g) monitoring financial reporting and audit firms. Strategic priorities retained from ASIC’s previous Corporate Plans include improving consumer outcomes, addressing financial system risks from climate change, delivering better retirement outcomes for superannuation fund members, and progress digital and data resilience and safety measures. 

Senate passes Bill on mandatory climate disclosures and financial market infrastructure

On 22 August 2024, the Senate passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) (Bill) which, among other things, introduces a timetable for the implementation of the sustainability-related financial disclosure framework adopted by the Australian Accounting Standards Board. Implementation of this framework is proposed to occur in a phased manner, with the largest entities being required to submit sustainability reports for their financial years commencing from 1 January 2025. The Senate made several minor amendments to the Bill, meaning that the Bill will be returned to the House of Representatives for approval in amended form. Assuming that the Senate’s amendments are not contentious, we expect that the amended Bill will be enacted in mid-late September 2024.

Legal

Takeovers Panel receives application in relation to the affairs of AIMS Property Securities Fund

On 31 August 2024, the Panel announced that it had received an application in relation to the affairs of APW from Mr Benjamin Graham atf the Graham Family Trust and Mr Warwick Sauer in his personal capacity and as a director of Baauer Pty Ltd atf the Baauer Family Trust (together, the Applicants). The Applicants allege that certain undisclosed associates acquired and sold units in APW on 14 June 2024 for the purposes of warehousing which, if not remedied, would result in the alleged associates retaining 9.86% of APW acquired in contravention of the ‘20% rule’ in section 606 of the Corporations Act 2001 (Cth) (Corporations Act). The Applicants seek (amongst other things) final orders that all of the acquired units in APW be vested in ASIC for sale, with any excess proceeds from the sale being permanently retained by ASIC. A sitting Panel has not been appointed at this stage and no decision has been made on whether to conduct proceedings.

Takeovers Panel publishes reasons for making a declaration of unacceptable circumstances in relation to the affairs of Sequoia Financial Group Limited

On 22 August 2024, the Panel published its reasons for its decision to make a declaration of unacceptable circumstances in relation to the affairs of Sequoia. As discussed in a previous edition of Boardroom Brief, Sequoia had brought an application in relation to its own affairs concerning allegations of alleged undisclosed associations between certain Sequoia shareholders (Requisitioning Shareholders) who were seeking to change the composition of Sequoia’s board and to control or influence the conduct of its affairs. Sequoia also alleged that the Requisitioning Shareholders had a collective voting power in excess of 20% and that they had purchased additional shares in Sequoia in contravention of section 606 of the Corporations Act. In deciding to make a declaration of unacceptable circumstances, the Panel noted, in effect, that (a) the Requisitioning Shareholders’ acquisition of control over voting shares in Sequoia did not take place in an informed market; (b) the market did not know the identity of the Requisitioning Shareholders who acquired a substantial interest in Sequoia; and (c) in the alternative the Requisitioning Shareholders contravened section 606, Chapter 6 or Chapter 6C of the Corporations Act. The decision points to the need for shareholders to exercise caution when conferring for the purpose of requisitioning a general meeting, in order to avoid a breach of the takeovers provisions of the Corporations Act.

Over the horizon

The right to disconnect: beginning right now

The 'right to disconnect' laws, contained in the amended Fair Work Act 2009 (Cth), discussed in a previous edition of Boardroom Brief, commenced on 26 August 2024. These laws effectively empower employees working in businesses with 15 or more employees to refuse to monitor, read or respond to contact, or attempted contact, from an employer or third party in relation to their work outside of the employee’s working hours "unless the refusal is unreasonable". The legislation makes clear that this is a workplace right. While the legislation leaves ‘unreasonable’ undefined, it provides that the following matters may be taken into account in determining whether a refusal is ‘unreasonable’: (1) the reason for the contact ; (2) how the contact was made and level of disruption caused to the employee; (3) the extent to which the employee is entitled to compensation to remain available to work extra hours; (4) the nature of the employee’s role and responsibilities, and (5) the employee’s personal circumstances (including family or caring responsibilities). The legislation also makes clear that refusal will be unreasonable if the contact is required under Commonwealth, State or Territory law. Directors should note that the Fair Work Commission has made clear that employees are permitted to apply to the Fair Work Commission to deal with disputes regarding the right to disconnect. Directors should ensure they communicate to their employees and ensure expectations on after hours contact and availability are clearly agreed as soon as possible, in order to mitigate potential disputes over the right to disconnect (and reputational risk). 

LEGAL