Newsletter: June 2015

Mertons' Corporate Update - June Quarter 2015

Mertons’ Corporate Update – June Quarter 2015

Mertons’ Corporate Update is intended to provide you with an overview of corporate governance matters, including regulatory changes, trends and other issues that are important for your business

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Board Effectiveness: Continuing the Journey

The UK Investment Association and EY have published a joint report, Board Effectiveness: Continuing the Journey, based on a series of individual meetings and roundtables held with chairmen, directors and senior investors to debate the issue.

Although the report highlights that there is no ‘silver bullet’ to improving effectiveness, as all boards and companies are different, the report does outline some key findings including:

  • The benefits of having regular discussions about the CEO’s tenure, when things are going well and not just when there are problems, and setting expectations around length of tenure at the time of appointment
  • The need to create a strong pipeline of diverse future boardroom talent by developing employees further down the organisation to ensure they are ‘board-ready’
  • The value of involving investors in defining the attributes to be sought in new board appointments
  • The importance of having a robust board evaluation strategy
  • The need for both chairs and non-executive directors to balance their portfolio of roles.

The report states that it aims to stimulate discussion between management, directors and investors, so that they gain a better understanding of each other’s positions. To help with the discussion, the report has formulated a number of questions under sever key themes:

  • The role of the chairman
  • The role of non-executive directors
  • Progress on board diversity
  • Board succession and the work of the nomination committee
  • The purpose and impact of board evaluations
  • Information flows to the board
  • The role of investors in board effectiveness

Download the report.

Mertons can help you analyse and develop clear role descriptions and succession plans, map and evaluate your information flows, and carry out your board reviews and evaluations.

OECD Corporate Governance Principles and Factbook

The OECD Principles of Corporate Governance were endorsed by OECD Ministers in 1999 and have since become an international benchmark for policy makers, investors, corporations and other stakeholders worldwide. They have advanced the corporate governance agenda and provided specific guidance for legislative and regulatory initiatives in both OECD and non OECD countries.

The OECD has also recently published a second edition of its factbook on corporate governance, providing the most comprehensive catalogue to date of the legal and regulatory frameworks, institutions and practices in place across more than 40 OECD and partner jurisdictions, to help policy-makers understand how different jurisdictions address the corporate governance issues and challenges raised in the OECD Corporate Governance Principles in practice. The aim is to ensure there is an easily accessible and up-to-date, factual underpinning for understanding countries’ institutional, legal and regulatory frameworks, and to support their further implementation of good corporate governance practices.

The factbook covers:

  • the ownership structure of listed companies
  • regulatory framework of corporate governance
  • the main public regulators of corporate governance
  • stock exchanges by legal origin
  • basic board structure and board independence
  • board-level committees
  • governance of board and key executive remuneration
  • notification of general meetings and information provided to shareholders
  • shareholders’ rights to request a meeting and place items on the agenda
  • shareholder voting
  • related party transactions
  • takeover bid rules.

Both the factbook and the revised principles are intended to assist market participants and policy makers in responding to emerging corporate governance risks, particularly in light of the corporate governance challenges that came into focus in the wake of the global financial crisis.

Download the OECD Principles of Corporate Governance.

Download the factbook

New Good Governance Guide on the appointment and reporting lines of the company secretary

“It is good governance for a company to recognise the independence of the company secretary in both the appointment process and the reporting mechanisms attached to the role. Boards expect the company secretary to give impartial advice and to act in the best interests of the company — it is incumbent on boards of directors to ensure that company secretaries are in a position to do so.” 

The Good Governance Guide provides clear guidance on what is required of company secretaries, the role of the Board in ensuring the independence of the company secretary, and other relevant information to ensure optimal performance of the function.

Download a copy of the Guide.

Contact Mertons to discuss an in-depth review of your Board and governance structures. 

Achieving Gender Diversity in Australia: the Ugly, the Bad and the Good

The BlackRock report, Achieving gender diversity in Australia: the ugly, the bad and the good, found there was a "growing disconnect between the proportion of women on boards and the proportion of women in senior management in Australian listed companies".

“While the debate surrounding the issue of more women on boards is no longer focused around if, but when, 30 per cent will be achieved, women are still underrepresented at the key management personnel (KMP) level in ASX 200 companies”, said Ms Pru Bennett, BlackRock’s Corporate Governance and Responsible Investment Director – Head of Asia Pacific, and author of the report.

The low representation of women at KMP level is seen a reflection of poor talent management given that for a long period of time the majority of graduates from Australian universities have been women. The report also concludes that the underrepresentation of women has a significant impact on the boardrooms of corporate Australia as the majority of non-executive directors (NEDs) appointed to ASX 200 boards are drawn from the senior management level of Australian companies. Two thirds of director appointments came from these ranks in 2014, yet women only make up 13 per cent of ASX 200 KMPs.

The other main finding of the report is that pay equality remained an issue, with men continuing to earn more than their female counterparts, with the gap at its largest at the key management level, where men earn an average of 28.9 per cent more than their female colleagues.

Download a copy of the report.

Directions 2015: Current issues and challenges facing Australian directors and boards

A report on the legal and regulatory issues and challenges facing Australian directors and boards by King & Wood Mallesons shows that more than 50% of surveyed directors see industrial relations laws and issues as a regulatory challenge for 2015.

The report, which is supported by the Australian Institute of Company Directors, also found that occupational health and safety laws, executive and director remuneration and continuous disclosure regulations and practices were ranked the top three regulatory reform issues that have received the most attention over the past year, while just over 40 per cent of respondents considered the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations on independence of directors to restrict optimal board composition.

Download the report.

Proposed changes to continuous disclosure

ASX Guidance Note 8, which deals with continuous disclosure has been comprehensively re-written and is going through a consultation process. The new version of Guidance Note 8 has much more guidance on a whole range of continuous disclosure issues compared to its predecessor. It also addresses a number of “hot button” issues that have emerged in recent years, including how to deal with earnings surprises, when confidential approaches on takeovers and other control transactions need to be disclosed, and when and how to respond to market rumours.

It also contains more detailed guidance on:

  • When information is “market sensitive” and therefore has to be disclosed under the Listing Rules.
  • The requirement to release information “immediately”, which ASX has clarified does not mean “instantaneously” but rather “promptly and without delay”.
  • The factors that ASX will take into account when assessing if a listed entity has disclosed information promptly and without delay.
  • How to use trading halts to manage disclosure issues.
  • Practical hints to manage the need to disclose immediately.
  • The headings and contents of announcements.
  • The application of the carve-outs to immediate disclosure in Listing Rule 3.1A, including in particular the incomplete proposals and negotiations exception, the requirement for confidentiality, and the “reasonable person” test.
  • The false market provisions in Listing Rule 3.1B.
  • Earnings surprises.
  • ASX enforcement practices, including the role of “price query letters” and “aware letters”.

Guidance on governance issues arising from the 2014 AGM season

The Governance Institute has published a guide dealing with governance issues that arose in the 2014 AGM season that concerned both the regulator and investors. This guidance addresses:

  • Maintaining integrity in the voting process
  • Proxy forms and recommendations to shareholders with respect to resolutions, and
  • Adjournment of the meeting when a resolution is contentious

Download the guide.

Mertons can give you confidence that your governance processes and systems are fully compliant. It can also work with you to plan, prepare and carry out your AGM.

Canada follows Germany in setting diversity targets

Recognising that increasing opportunities for women to serve on corporate boards and in leadership roles makes good business sense, the Canadian government has proposed amendments to the Canada Business Corporations Act to promote gender diversity among public companies. It will do this using the widely recognised “comply or explain” model of disclosure currently required for TSX-listed companies and by most provincial securities regulators.

Amendments will also be proposed to modernise director election processes and communications with shareholders and to strengthen corporate transparency through an explicit ban on bearer instruments, a type of fixed-income security through which the identity of the owner can be concealed. Amendments to related statutes governing co-operatives and not-for-profit corporations will also be introduced to ensure continued alignment among federal laws.

The announcement follows the Australian Institute of Company Directors’ (AICD’s) recent diversity announcement, which recommended voluntary targets, rather than mandated quotas, for all S&P/ASX 200 boards to ensure that 30% of their directors are female by the end of 2018.

Canada’s move also follows Germany, which passed a law in March forcing 100 of the country's top companies to have at least 30% of board seats held by women by January next year.

ATO to publish company tax information

The tax details of around 700 private companies with more than $100 million in turnover are likely to be published following legislation that comes into effect on 1 July 2015. The ATO will publish the ABN, company name, total revenue, declared taxable income and tax payable. The ATO has said that the information would likely be published towards the end of 2015 and will cover information from the 2014 tax year.

This is likely to create renewed interest in the affairs of companies, including levels of taxes paid.

Governance disclosures – Implementing the 3rd edition of the Corporate Governance Principles

The 3rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations set benchmark for good corporate governance practices for listed entities in Australia. It came into effect on 1 July 2014, so most entities with a 30 June balance date will be disclosing against this edition in their forthcoming annual reports.  

Professional services firm Deloitte and Group of 100, the peak body for finance executives from the major listed entities, have launched a guide to implementing principle 7 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.

Four key recommendations include:

  • 7.1 focuses on the need to set up and manage a risk committee to oversee risk, and
  • 7.2 on the need to annually review the risk-management framework.
  • 7.3 recommending where a listed entity should disclose whether it has an internal audit function, how it is structured and what role it performs. Unlike recommendation 7.3 in the second edition, this will apply to financial statements for half yearly and quarterly reporting periods as well as year-end financial statements. 
  • 7.4 arose in response to an increasing focus by investors on a listed entity’s ability to create or preserve value. It is modified from principle 3 from the second edition to “act ethically and responsibly”, and is about assessing and managing economic, environmental and social sustainability risks.

A review of early adopters by the Governance Institute looks at the possible pressure points for the upcoming reports:

“Market focus on forthcoming corporate governance statements will be on the information provided to investors, to allow them to assess the governance frameworks in their investee companies, on:

  • the nine new recommendations (1.2 (background checks and information to be given for election of directors); 1.3 (written contracts of appointment); 1.4 (company secretary); 2.6 (induction and professional development); 4.3 (external auditor at AGM); 6.1 (information on the website); 6.4 (facilitate electronic communications); 7.3 (internal audit); and 7.4 (sustainability risks))
  • the number of entities who took the opportunity to streamline their annual reports by making their corporate governance disclosures on their website
  • the number of entities who have chosen to adopt and report on the alternative to the committee structures in recommendations 2.1 (nomination committee); 4.1 (audit committee); 7.1 (risk committee); and 8.1 (remuneration committee), or the alternative allowed in recommendation 7.3 to disclose the risk management and internal control processes it has in place in lieu of an internal audit function
  •  (2.2 (board skills matrix), 7.1 (risk committee), 7.2 (annual risk review) and 6.2 (investor relations program))
    • recommendations that were a variation of a recommendation or disclosure in the second edition.”

Read the report from the Governance Institute of Australia.

Contact Mertons for assistance in the preparation of your governance report.


ASIC Reduces red tape for changes of auditors

ASIC has announced it will now generally consent to the resignation of an auditor at any time of the year, subject to some conditions. Previously, ASIC only consented to the resignation of an auditor of a public company to take place at an annual general meeting (AGM) unless there were exceptional circumstances.

ASIC will consent to the resignation of an auditor at any time if:

  • it has no concerns in connection with the resignation, such as a concern where there is a disagreement between management and the auditor over an accounting treatment; and
  • the change in auditor and the reasons for the change are communicated to members or in a disclosure notice, unless the change occurs at an AGM of a public company.

The purpose of the change is to cut red tape and give greater flexibility in the timing of changes of auditors.

The new approach is outlined in a revised Regulatory Guide 26 Resignation, removal and replacement of auditors (RG 26). RG 26 also sets out how to apply for ASIC consent to the resignation, removal and replacement of auditors of registered schemes, Australian Financial Services licensees and credit licensee trust accounts.

For more information and to download Regulatory Guide 26, go to the ASIC website.

Do you need to change your auditor? Let Mertons help you carry out the change and maintain compliance.

Focus areas for 30 June 2015 financial reports

ASIC has announced its focus areas for 30 June 2015 financial reports of listed entities and other entities of public interest with many stakeholders.

‘Directors and auditors should continue to focus on values of assets and accounting policy choices.  We continue to see instances where companies have used unrealistic assumptions in testing the value of assets or have applied inappropriate accounting choices in areas such as revenue recognition,’ ASIC Commissioner John Price said.

 Asset values

ASIC encourages preparers and auditors of financial reports to carefully consider the need to impair goodwill and other assets. ASIC continues to find impairment calculations that use unrealistic cash flows and assumptions, as well as material mismatches between the cash flows used and the assets being tested for impairment.

Fair values attributed to financial assets should also be based on appropriate models, assumptions and inputs.

Particular focus should be given to assets of companies in extractive industries and mining support services, as well as asset values that may be affected by digital disruption.

Accounting policy choices

Preparers and auditors should focus on the appropriateness of key accounting policy choices that can significantly affect reported results. These include off-balance sheet arrangements, revenue recognition, expensing of costs that should not be included in asset values, and tax accounting.

Material disclosures

ASIC’s surveillance continues to focus on material disclosures of information useful to investors and others using financial reports, such as assumptions supporting accounting estimates, significant accounting policy choices, and the impact of new reporting requirements. ASIC does not pursue immaterial disclosures that may add unnecessary clutter to financial reports.

Role of directors

Even though directors do not need to be accounting experts, they should seek explanation and professional advice supporting the accounting treatments chosen if needed and, where appropriate, challenge the accounting estimates and treatments applied in the financial report. They should particularly seek advice where a treatment does not reflect their understanding of the substance of an arrangement.

Further information can be found in ASIC Information Sheet 183 Directors and financial reporting (INFO 183). ASIC also intends to issue an information sheet for directors and audit committees on impairment of non-financial assets before 30 June.

More detailed information is available from

Let Mertons assist your with all your disclosure and compliance requirements.

Innovation in corporate reporting

Presentation at panel session by John Price, Commissioner, Australian Securities and Investments Commission, G100 Congress 2015: An insightful look at the issues, challenges and solutions facing Australian business (Sydney, Australia) Wednesday, 20 May 2015

In discussing some of the thoughts about innovation, Mr Price also acknowledged the challenges involved in making changes to existing corporate reports, including directors being cautious of possible criticism or liability if important information is omitted from financial reports or is not given sufficient prominence or explanation; difficult judgements as to whether particular information is material to users; as well as the increased time required to prepare more innovative and useful reports.

Mr Price then presented some considerations that may be useful when reviewing the presentation of annual reports include:

  • consider whether the report is clear, concise and effective for its intended audience
  • tell the story about the financial position and performance, including business strategies, risks and prospects
  • ensure that information in the operating and financial review and other documents links back to the financial report and that they tell a cohesive story
  • ensure an appropriate balance is achieved between flexibility in presentation and comparability, and
  • remember that unnecessary detail can detract from the information that is important to investors and other users.

He also recommended the guides issued by ASIC to provide guidance to assist directors and preparers of financial reports to provide more useful and meaningful information in annual reports, namely Regulatory Guide 247 Effective disclosure in an operating and financial review and Regulatory Guide 230 Disclosing non-IFRS financial information. These two regulatory guides are complementary and are useful when considering how to best communicate information to investors.

Download a copy of the speech.

Mertons can help you with all your reporting obligations and communications to shareholders.

ASIC updates insolvency guidance

The Australian Securities and Investments Commission (ASIC) has released updated regulatory guidance for insolvent or financially distressed companies and registered schemes.

The regulator’s updated Regulatory Guide 174 Relief for externally administered companies and registered schemes being wound up follows consultation launched in August 2014.

ASIC has issued a new legislative instrument which provides companies with a liquidator appointed with an exemption from financial reporting and, if the company is also a public company, with annual general meeting (AGM) relief in certain circumstances. Companies in other forms of external administration with an uncertain future are permitted to delay preparing their financial reports under ASIC’s relief. ASIC’s new instrument also provides exemption relief from financial reporting to insolvent registered managed investment schemes.

For further information and to download the Regulatory Guide go to ASIC’s website.

ASIC releases online guide for small business directors

ASIC has released a new online resource to help small business owners understand their role and responsibilities as company directors.

ASIC's guide for small business directors is particularly useful for small businesses looking to change from a sole trader to a company business structure. It provides an overview of directors' duties under the Corporations Act with a focus on small business directors. The guide covers the following topics:

  • what it means to be a company director
  • how to become a company director
  • directors' key responsibilities
  • directors' liabilities when things go wrong
  • how to resign as a director.

Download the Guide.

Good news for small business

ATO provides guidance on tax reprieve for small business

The Australian Taxation Office (ATO) has published guidance on the Government’s decision to allow small business to immediately deduct each asset that costs less than $20,000.

All small businesses can immediately deduct every asset costing less than $20,000 that they have purchased since Budget night and can continue to do so until the end of June 2017.

Small companies with a turnover of less than $2 million will benefit from a 1.5 per cent tax cut from 1 July 2015. This is the lowest tax rate to small business since 1967.

Small businesses can get the latest tax updates and information via the ATO’s new small business newsroom service. Subscribers to the service receive email updates on the latest news every three to four weeks.

Subscribers can also choose to stop receiving general tax information by mail and read it in the newsroom instead. Small businesses can check key dates and download them to their own calendars.

More than 45,000 small businesses have subscribed to the service which can be found at

Unfair contract provisions extended to small business

The Commonwealth Government has extended the unfair contract protections that apply to consumers to the small business sector.

The new small business protections will allow the courts to declare void a term within a contract that is unfair. For example, a term that allows a big business to unilaterally change the price or key terms during the course of the contract could be considered unfair. Businesses that offer low value standard form contracts will have to comply with the new law.

The government has provided $1.4 million to the Australian Competition and Consumer Commission to ensure businesses comply with the new rules, while the minister for small business has written to state and territory consumer affairs ministers asking them to agree to the changes.

A new jobs and small business package will also be announced over the coming weeks. It will include a small business company tax cut on 1 July, which is expected to be at least as big as the 1.5 per cent already flagged.

Announcing the changes, The Hon Bruce Billson, minister for small business said: “Small business is the engine room of Australia’s economic future. We want to ensure that small businesses have access to a level playing field so they can continue to grow, invest and create jobs.” Read the announcement.

In March, the government announced draft legislation to establish an Australian small business and family enterprise ombudsman, which would be a Commonwealth-wide advocate for small businesses and family enterprises; a concierge for dispute resolution; and a contributor to the development of small business friendly Commonwealth laws and regulations.

Australian Privacy Principles guidelines update

The Office of the Australian Information Commissioner (OAIC) has issued updates to the Australian Privacy Principle (APP) guidelines. Some of the main changes include:

  • Chapter A: to explain that the APP guidelines may provide relevant guidance to Australian Capital Territory public sector agencies covered by the ACT Information Privacy Act 2014
  • Chapter B: to clarify and expand upon guidance about ‘carries on business in Australia’, a component of the test for whether an APP entity has an ‘Australian link’
  • Chapter 8: to clarify guidance about the circumstances where an APP entity may be taken to breach the APPs, when it provides personal information to an overseas contractor as a ‘use’, and the information is mishandled overseas; and to expand guidance about the circumstances in which the ‘international agreement’ exception in APP 8.2(e) applies
  • Chapter 11: to update guidance about ‘reasonable steps’ and examples for consistency with the OAIC’s Guide to securing personal information (2015). 

The APP guidelines outline the mandatory requirements in the APPs, the Australian Information Commissioner’s interpretation of the APPs and examples of how the APPs may apply to particular circumstances, as well as good privacy practice.

A summary of the changes and a link to previous versions of these Chapters of the guidelines is available on the APP guidelines page.

Let Mertons help you put in place the necessary policies and processes to comply with the privacy principles.

Culture at the forefront of corporate performance

Two very different organisations have recently commented on the importance of a company’s culture when it comes to corporate performance.

Speaking before a senate economics committee in Canberra in early June, Australian Securities and Investments Commission (ASIC) chairman Greg Medcraft said individual company officers should be penalised in situations where poor business culture leads to poor business performance.

Pinpointing culture as a big driver of conduct in the financial industry, Medcraft said that bad culture often leads to bad conduct, which can inevitably lead to poor outcomes for consumers. This, he said, is “a polite way of saying people are getting fleeced.”

As a result, Medcraft said that ASIC is planning to incorporate culture very strongly into its role as a conduct regulator and enforcement agency. The areas it plans to target are those where poor practices may increase potential for poor conduct; therefore increase the risk to trust, and investor and consumer trust and confidence.

This will include incorporating culture into its risk-based surveillance reviews; using surveillance findings to better understand how culture is driving conduct among those that regulate; and communicating to industry and firms where the regulator has problems with their culture and conduct.

Download the speech.

In a recent article article by Heidrick & Struggles, the firm proposes that business culture is rapidly becoming a crucial factor in business performance and hence board effectiveness.

While warning that boards must be careful not to begin micro-managing a business’ culture it is suggested that boards must be able to understand and “take the temperature” of the business’ culture in order to be able to fulfil their roles as directors.

While some directors may resist being involved in culture as it is difficult to define and measure, the writers claim that culture should not be invisible to the board and can be discerned from the values of the business and through questioning statements which measure agreement with the values.

Having an accurate gauge of the culture can be important for succession planning, compliance and risk management. For example, with succession planning ensuring either a cultural fit or driving a cultural change with a new chief executive officer requires a deep understanding of culture. 

Similarly, understanding culture must help to identify cultural drivers that could impact on compliance or risk. For example if a hidden culture of extreme risk taking or carelessness were uncovered there would be ramifications for the board – which  could then instigate processes and controls to avert any crisis while then addressing a necessary cultural shift. 

Read the full article.

Contact Mertons for a discussion on the culture and risk profile of your business.

ASX News

Updated Appendix 4G Key to Corporate Governance Disclosures

The ASX has released a revised version of ASX Listing Rule Appendix 4G Key to Disclosures Corporate Governance Council Principles and Recommendations. ASX has modified the format of the form to make it shorter and more user-friendly. Explanatory notes have also been added dealing with some of the more common questions that are asked about the form. The only substantive change is that ASX has expanded the middle column for recommendation 7.2 to split out the entries for "the fact that board or a committee of the board reviews the entity's risk management framework at least annually to satisfy itself that it continues to be sound" and "that such a review has taken place in the reporting period covered by this Appendix 4G". An editable Word version of the Form can be downloaded from under the heading "Corporate Governance Disclosures".

Mertons can assist with all your ASX reporting requirements and compliance.

Appendix 7A Timetables new section 13

ASX has released an amended version of ASX Listing Rule Appendix 7A Timetables, containing a new section 13 timetable. An entity must follow the time limits set out in this new timetable when undertaking a transfer of existing securities in the entity under section 444GA of the Corporations Act 2001 in accordance with a deed of company arrangement executed by the entity. Click on the link to access the revised Appendix 7A.

Mertons can assist you in ensuring compliance with new ASX requirements.

ASX Consultation on Transition to T+2 Settlement

ASX will transition from a T+3 to a T+2 settlement cycle for cash equities in March 2016. The current consultation seeks feedback on the proposed rule changes required to implement T+2 and a consequential reduction in the ex-period for corporate actions. It also seeks feedback on the transitional arrangements being put in place to manage implementation of the change. Further information on T+2 is available on the ASX website.

ASX is seeking submissions on the consultation paper by 8 July 2015. Submissions should be sent to

Australia Post changes may require changes to constitutions

In early March, Australia Post announced it will introduce a new two-tier speed of delivery of mail – a ‘regular service’, which will deliver mail two day slower than currently, and a ‘premium service’, which will deliver mail at the current schedule.

The Governance Institute of Australia points out that companies need to consider when they will pay the premium for shareholder communications. Options to consider include whether to pay the premium for capital raisings, dividend mailings (cheques) and general meeting materials.

Importantly, constitutions should be reviewed to ensure that the wording has sufficient breadth to cover non-guaranteed daily delivery. For example, wording such as ‘deemed delivered 1–2 days after despatch’ or ‘deemed delivered at the time of mailing’ may be required. 

Download a copy of the Australia Post factsheet on the changes.

Mertons can help you review all your shareholders communications for maximum effectiveness and efficiency. 

ACNC Charity Compliance Report December 2012 – December 2014 and Beyond

The report, Charity Compliance Report: December 2012 – December 2014 and Beyond, was released by the Australian Charities and Not-for-profits Commission (ACNC) in May. It shows the compliance work that the organisation has undertaken since the establishment of the charity regulator in December 2012.

The Report shows that in the two years of operation, the ACNC has received more than 1300 complaints against Australian charities. The majority of these complaints were able to be resolved without proceeding to a formal investigation; however, 521 complaints were assessed by the ACNC’s compliance team, of which 96 became the subject of a compliance investigation.

The report also found:

  • Charities subject to ACNC compliance cases controlled over $100 million in charitable assets
  • Nine charities had their charity status revoked as a result of investigations
  • The majority of complaints (67%) came from the public, followed by other government agencies (18%)
  • 26% concerns were about large charities – those with revenue greater than $1 million. However, large charities only make up 17% registered charities
  • 26% concerns were made about public companies, even though they comprise only 12% registered charities.

The most common complaints from the public were:

  • Charitable resources being used inappropriately
  • Possible financial mismanagement or fraud
  • Lack of transparency and accountability
  • Charities harming their beneficiaries
  • Sham charities and fundraising

Download a copy of the report.

The ACNC has also released to the public the financial information of nearly 23,000 Australian charities. The public can access the information that has been provided by registered charities as part of their 2014 Annual Information Statements on the Charity Register. The ACNC is keen to increase the transparency of the sector. Accompanying the release is a new factsheet on interpreting the data, as the ACNC is keen that the public understand how to interpret the information available. For example, administration costs have always been a point of interest for donors and researchers and the factsheet aims to explain administration costs and why they are not a comprehensive or reliable measure of a charity’s work and its outcomes.

To search the ACNC Charity Register, visit

Australian Registry Service Provider Survey 2015

The 7th annual J.P. Morgan and Governance Institute of Australia Australian Registry Service Provider Survey provides an overview of the current state of the Australian registry services industry, and the future direction and competitive dynamics within the industry. The report collates data from surveys of companies in the S&P/ASX200 conducted from December 2014 to January 2015.

Key conclusions from the survey include:

  • Duopoly market structure is holding – Computershare and Link service 95% of companies in the ASX200, with other providers such as Boardroom comprising ~5%.
  • Current performance is strong across all registry providers –with all providers receiving a high proportion of positive (good or better) responses – Computershare 97%, Link 82%, Boardroom 100%.
  • Quality of product and innovation are becoming far more important determinants in outsourcing registry services.
  • The majority of respondents indicated either an improved cost structure or no change to cost structure.
  • Corporate activity stronger in 2014 – Total IPO capital raised in 2014 was ~A$29bn, versus ~A$24bn raised in 2013.

  Table 1 – reproduced from the report.

Download a copy of the report.



Sources of information for this document:

Australian Charities and Not-for-profits Commission (ACNC); Australian Institute of Company Directors (AICD); Australia Post; Australian Securities and Investments Commission (ASIC); Australian Securities Exchange (ASX); Australian Taxation Office (ATO); Blackrock; ComLaw; Commonwealth Government; Deloitte; EY; Fairfax Media; Fair Work Commission; Governance Institute; Heidrick & Struggles; Herbert Smith Freehills; J.P. Morgan; King&Wood Mallesons; OECD; Office of the Australian Information Commissioner (OAIC); Parliamentary Library; UK Investment Association.


Disclaimer: The content in this Mertons Corporate Update is only intended to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its currency. You should seek legal or other professional advice before acting or relying on any of the content.