mertons corporate snapshot - march quarter 2011
Mertons' Corporate Snapshot is intended to provide you with an overview of corporate governance matters including compliance changes, trends and other issues. Should you need further information about, or help on any of the matters raised here, or to discuss how these matters may affect your business, please contact:
Mark Licciardo
Managing Director
Level 6, 350 Collins Street
Melbourne Victoria 3000
ph: 03 8689 9997
fax: 03 9670 5942
mobile: 0419 327 725
www.mertons.com.au
James Hardie NSW Court of Appeal Decision and its Implications
The NSW Court of Appeal decision in the James Hardie case (handed down on 17 December 2010) provided interesting learnings for companies, their boards and their officers, in particular, relating to the definition, role and responsibilities of an officer of a company. In brief, a person is an officer of a company if they make, or participate in making, decisions that affect the whole, or a substantial part, of the business of the corporation, even if they are not the ultimate decision maker. If an officer knows that something is misleading, subject to limitations or that something needs to be done, the officer must raise the issue with the decision makers, even if they feel the decision makers already know or should know about the matter.
New ASIC Guides to Enhance Reliability and Quality of Expert Reports
On 30 March ASIC released new guidance to enhance the reliability and quality of expert reports commissioned by companies to assist shareholders and others to make decisions on matters such as takeover bids, schemes of arrangement and related party transactions. At the same time, ASIC also released guidance aimed at bringing improvement in the disclosure of related party transactions.
ASX Updates
Amendment to Listing Rule 8.14. An amendment to this rule permits listed entities and their registries to charge a reasonable fee for registering paper-based off-market transfers, but before they can do so, they must formally notify ASX Listings of the proposed fee.
ASX Market Review. The ASX has commenced an SME, Mid-Cap and Micro-Cap Equity Market Review with the aim of better meeting the needs of issuers and investors outside the S&P/ASX200.
Executive Remuneration
The Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Bill 2011 was introduced into Parliament on 23 February 2011. Two of the most contentious aspects of the draft bill remain intact: the 'two strikes' rule and the rule on shareholder approval for 'no vacancy' declaration. There are important implications to consider in preparing for an AGM if the legislation passes in its current form.
Australian Registry Service Provider Survey 2011
The Australian Registry Service Provider Survey 2011 by J.P. Morgan and CSA found that the expertise of the registry service provider is the most important factor for a company in determining which service provider to choose. Also, only 28% of respondents put the registry contract out to a competitive tender upon expiry.
A National Regulator for the Not-for-Profit Sector?
Moves by the government to form a national regulator for the NFP sector continue to progress, with suggestions that the new regulator could be initially established within the ATO or ASIC. The government has also proposed the introduction of a 'best practice regulatory framework' for NFPs.
Australian Government Reviews Retail / Wholesale Definitions
The government is reviewing the distinction between retail and wholesale investors. The options being considered include retaining the current system, but updating or indexing thresholds, or excluding illiquid assets from the threshold test; removing the distinction between retail and wholesale investors; introducing a subjective 'sophisticated investor' test; or maintaining the existing tests and thresholds.
Survey into the Implementation of Securities Trading Policy
A survey by Freehills regarding updated policies lodged with the ASX showed that the main approaches taken by companies has not changed, but that the manner in which they are applied differed significantly from company to company.
ASIC Wins Appeal in Case Against Fortescue Metals Group
The Full Court of the Federal Court of Australia has upheld the appeal by the Australian Securities and Investments Commission, and found that announcements made by Fortescue Metals Group and its CEO Andrew Forrest in August and November 2004 regarding agreements entered into with Chinese companies were misleading and deceptive. The judgment emphasises that companies' announcements to ASX, markets and the media must be carefully drafted to avoid any possibility of being misleading. Further, if information is released inadvertently which is potentially misleading, a company should swiftly correct it.
Price Signalling Bill Released
The Treasurer has introduced into Parliament a Bill to prohibit anti-competitive price signalling, the Competition and Consumer Amendment (CCA) Bill (No. 1) 2011. Initially the Bill will only apply to the banking sector, but potentially will be extended to other sectors in due course.
Sources of information for this document include:
Australian Securities and Investments Commission; Australian Securities
Exchange; Chartered Secretaries Australia; Commonwealth Government; Freehills; Lander & Rogers Lawyers, LexisNexis.