Legislation and proposed legislation 

AASB publishes Australian Sustainability Reporting Standards

The Australian Accounting Standards Board (AASB) has published its two inaugural Australian Sustainability Reporting Standards, as follows:

• AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information (AASB S1). AASB S1 is a voluntary standard, as it has not been issued by the AASB Board for the purposes of the Corporations Act. An entity may elect to apply AASB S1, which would require it to disclose information about all sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, its access to finance or cost of capital over the short, medium or long term.
• AASB S2 Climate-related Disclosures (AASB S2). AASB S2 is a mandatory standard given force under the Corporations Act for the purposes of the preparation of sustainability reports under the new mandatory climate-related financial reporting regime in Part 2M.3 of the Corporations Act. Where applicable, AASB S2 requires an entity to disclose information about climate-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, its access to finance or cost of capital over the short, medium or long term.

Merger reform for a more competitive economy: Government response to consultation

The government response to consultation explains the Australian Government’s merger reform policy following extensive consultation with stakeholders. It also includes proposed notification thresholds.

On 10 April 2024, the government announced reforms to Australia’s merger rules to promote competition, protect consumers and provide greater certainty by streamlining the approvals process. The reforms were detailed in the Merger Reform paper.

Treasury consulted widely to inform the policy and legislation design, with stakeholders representing the perspectives of consumers, businesses (including small-to-medium enterprises and multinational businesses), agriculture, legal practitioners, investors, academics and industry associations.

The reforms will be implemented principally through amendments to the Competition and Consumer Act 2010 (Cth) and associated subordinate legislation.

On 24 July 2024, Treasury released the exposure draft of what is now the Treasury Laws Amendment (Mergers and Acquisitions Reform) Bill 2024 (Merger Reform Bill). The refinements to the Merger Reform Bill reflect extensive and ongoing engagement with stakeholders to ensure the system serves consumers, business and the community.

On 30 August 2024, Treasury released the merger notification thresholds consultation paper. Following consultation, the government has announced that there will be general notification thresholds that apply, in conjunction with additional targeted notification requirements that capture other high-risk acquisitions.

In summary, the notification thresholds will comprise:

• A single economy-wide monetary threshold focused on large mergers, where the combined merger parties (including the acquirer group) have above $200 million combined Australian turnover AND are buying businesses or assets above either $50 million Australian turnover OR $250 million global transaction value. This will ensure that large acquisitions (e.g., ANZ Group acquiring Suncorp Bank) would need to be notified. 
• Lower thresholds that will apply for very large businesses (above $500 million Australian turnover) buying smaller businesses or assets (above $10 million Australian turnover). This would ensure very large businesses making smaller acquisitions (e.g., Woolworths acquiring SUPA IGA Karabar) would need to be notified. 
• To target serial acquisitions, for businesses with combined Australian turnover above $200 million, a 3-year cumulative $50 million turnover threshold ($10 million for very large businesses) will capture acquisitions in the same or substitutable goods or services. This would ensure that the aggregation of market share through small acquisitions would need to be notified (e.g., Petstock completing a large number of small acquisitions and becoming the second largest specialty pet supplies retail chain in Australia).

The government will not be proceeding with economy-wide market concentration thresholds given stakeholder feedback on their uncertainty and complexity when applied in practice. Instead, the government is exploring a low-cost targeted screening tool to determine whether businesses in concentrated markets need to notify transactions or not.

The government will also ensure that acquisitions that are unlikely to have an impact on Australia will not need to be notified. Additionally, benign land acquisitions involving residential development and certain commercial property acquisitions will be exempt from notification.

The government intends to ensure there is adequate scrutiny of acquisitions by supermarkets and that acquisitions that result in changes in certain levels of control, including by unlisted or private capital, will be addressed through subordinate legislation.

Further detail on thresholds will be consulted on through the development of subordinate legislation later in 2024-25. Treasury will consult on further detail on the notification thresholds through the development of subordinate legislation later in 2024-25.

For more information, see the Treasury media release and the government response to consultation. 

Landmark cybersecurity legislation package introduced

On 9 October 2024, a landmark cybersecurity legislation package was introduced into Parliament. The package will implement seven initiatives under the 2023-2030 Australian Cyber Security Strategy, addressing legislative gaps to bring Australia in line with international best practice and take the next step to ensure Australia is on track to become a global leader in cybersecurity. The package includes:

• The Cyber Security Bill 2024 (Cth), which establishes Australia's first standalone Cyber Security Act to provide additional protections to Australian people and businesses, build mitigations for extant cyber risks, and improve the government's visibility of the threat environment to inform protections, incident response procedures, and future policy through various measures, including:
  • mandating minimum cybersecurity standards for smart devices;
  • introducing mandatory ransomware reporting for certain businesses to report ransom payments;
  • introducing a "limited use" obligation for the National Cyber Security Coordinator and the Australian Signals Directorate (ASD); and
  • establishing a Cyber Incident Review Board to conduct post-incident reviews into significant cyber security incidents.
• The Security of Critical Infrastructure and Other Legislation Amendment (Enhanced Response and Prevention) Bill 2024 (Cth), which will amend the Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act) to give effect to the legislative reforms outlined under Shield 4 of the 2023-2030 Australian Cyber Security Strategy, including:
  • clarifying existing obligations in relation to systems holding business critical data;
  • enhancing government assistance measures to better manage the impacts of all hazards incidents on critical infrastructure;
  • simplifying information sharing across industry and government;
  • introducing a power for the government to direct entities to address serious deficiencies within their risk management programs; and
  • aligning regulation for the security of telecommunications into the SOCI Act.
• The Intelligence Services and Other Legislation Amendment (Cyber Security) Bill 2024 (Cth), which:
  • amends the Intelligence Services Act 2001 (Cth), to legislate a limited use obligation to protect the information voluntarily provided to, or acquired or prepared by, the ASD during an impacted entity's engagement in relation to a cybersecurity incident or a cybersecurity incident that may potentially occur.
  • amends the Freedom of Information Act 1982 (Cth) to include an exemption from Freedom of Information requests for a document given to, or received by, the National Cyber Security Coordinator for the purposes set out under Part 4 of the Cyber Security Bill 2024 (Cth).

The amendments in this Bill complement the "limited use" obligation applicable to the National Cyber Security Coordinator outlined under Part 4 of the Cyber Security Bill 2024 (Cth).

For more information, see the Department of Home Affairs: Introduction of landmark Cyber Security Legislation Package (9 October 2024).

Labor’s reforms to boost financial market competition pave way for new provider

A new provider of clearing and settlement services has emerged following the passage of the government’s new legislation (in September 2023) to improve competition in financial markets, with news ASIC has approved a licence for a new player, FinClear.

Clearing and settlement services are critical to the functioning and stability of financial markets and the legislation has enabled providers to emerge.

The legislation which passed in September last year created a framework for fair, transparent and non discriminatory access to market infrastructure for competitors, allowing them to offer their own clearing and settlement services.
The licence recently provided by ASIC will underpin the operations of FinClear’s subsidiary FCX.

The government says the emergence of a new provider of clearing and settlement services is evidence that their economic plan is helping to make the economy more competitive and our financial system stronger and more productive.

For more information, see ASIC media release. 

Feedback Invited: Proposed Australian Standard on Sustainability Assurance - ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001

The Auditing and Assurance Standards Board (AUASB) has released an Exposure Draft of a Proposed Australian Standard on Sustainability Assurance ASSA 5010 Timeline for Audits and Reviews of Information in Sustainability Reports under the Corporations Act 2001 (ED 02/24) that outlines a proposed timeline for when information in a sustainability report prepared in accordance with Chapter 2M of the Corporations Act 2001 (Cth) (Corporations Act) would be subject to audit and/or review. As these proposals will affect preparers, users, and auditors, the AUASB has stated that it is important that it hears views of a wide range of stakeholders. The deadline for providing comments on the Exposure Draft is 16 November 2024.

ED 02/24 has been developed in response to schedule 4 of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 (Cth) (the Bill), which proposes a new mandatory climate disclosure framework for larger entities that prepare financial reports under Chapter 2M of the Corporations Act. The Bill has been passed by both Houses of Parliament and is awaiting Royal Assent.

The Bill will require (among other things):

• that certain entities that prepare annual financial reports under Chapter 2M of the Corporations Act must prepare an annual sustainability report to accompany the financial report; and 
• that the AUASB must specify the extent to which sustainability reports prepared in accordance with the Corporations Act for financial years commencing on or before 30 June 2030 must be audited and/or reviewed (assurance phasing).

Following extensive consultation and outreach on its March 2024 Consultation Paper, the AUASB’s ED 02/24 proposes an assurance phasing model that considers the likely:

• maturity of reporting entities’ systems and processes;
• demand for assurance over disclosures; and
• capacity and capabilities of auditors and their experts during the initial years of reporting.

Stakeholders are encouraged to provide feedback on ED 02/24 by:

• submitting a comment letter via the AUASB website; and
• attending a roundtable discussion – details to be provided shortly.

Any queries about the Exposure Draft should be directed to enquiries@auasb.gov.au.