mertons corporate snapshot - september 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 or assistance with 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
Centro civil penalty proceedings
The Federal Court made declarations that all directors and the CFO contravened the Corporations Act. The Court also fined Mr Scott (former CEO) $30,000 and disqualified Mr Nenna (former CFO) from managing corporations for two years. The Court also ordered the defendants to pay ASIC's cost of the action.
Executive remuneration
- The Regulations made under the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011 commenced 1 July. Under the Executive Remuneration Act, key management personnel and their closely related parties are prohibited from hedging the key management personnel's incentive remuneration.
- Changes to the Corporations Act have cast uncertainty about whether a shareholder can appoint a chairperson, who is a member of the company's key management personnel, to vote as their proxy in matters relating to remuneration report resolutions. In fact, section 250R(4) prohibits the chairperson from voting undirected proxies on the remuneration report resolutions, despite the government having indicated its intention that the chairperson should be able to vote undirected proxies in certain circumstances, including on remuneration report resolutions.
- ASIC has called for better disclosure in remuneration reports, especially in the areas of the board's policy on the nature and amount of remuneration of key management personnel, the non-financial performance conditions in short-term incentive plans, the reason why performance conditions have been chosen, and the terms and conditions of incentive plans.
New OHS laws bring significant changes
New national OHS laws (Work Health and Safety Bill 2011) will come into play from 1 January 2012. Under the new legislation, 'a person conducting a business or undertaking' (PCBU) is responsible for the health and safety of everyone in the workplace independently of whether they are employees, contractors, sub-contractors (and their employees), labour hire staff, outworkers, trainees, apprentices, work experience students, and volunteers – that is, anyone who carries out work in any capacity for a PCBU. Directors may be personally liable under the new laws and need to take an active interest. Officers can be jailed for up to five years for serious breaches of the legislation or incur penalties of up to $600,000.
ASIC News
- 11-168AD Nexbis Limited, a listed provider of telecommunications products and services, has paid a $33,000 penalty for an alleged contravention of its continuous disclosure obligations.
- 11-169MR Former Astarra investment manager, Mr Shawn Darrell Richard, has been sentenced to a total of three years and nine months imprisonment with a minimum term of two years and six months following an investigation by ASIC into the collapse of the Astarra Strategic Fund and its responsible entity, Trio Capital Ltd in 2009.
- AD11-131 ASIC has announced its intention to extend the interim class order relief granted to lawyers and funders involved in legal proceedings structured as funded representative proceedings and funding claims lodged with liquidators to prove in the winding up of an insolvent company.
- ASIC has highlighted the key focus areas for financial reports as at 30 June 2011. These are: segment reporting, consolidation of controlled entities, use of the going concern assumption, asset impairment, fair value of financial assets, financial instrument disclosures, disclosures of estimates and accounting policy judgements, accounting for business combinations, related party disclosures, operating and financial review and alternative profits.
Resolving matters before they reach the courts
The Civil Dispute Resolution Act 2011 (CDR Act), which came into effect on 1 August 2011, requires parties to take genuine steps to resolve a dispute before proceedings are commenced in the Australian Federal Court or the Federal Magistrates Court. The Act requires litigants to consider their options for early dispute resolution before going to court. Under the new requirements, litigants to matters in the federal courts must file a statement setting out what steps they took to resolve their dispute and, if they took none, to explain why.
ASX Updates
- Miraqle shares - Available at no cost to ASX listed entities, miraqle shares is an online equity market intelligence tool that is available through Orient Capital's miraqle platform. Drawing data feeds directly from the ASX, miraqle shares provides listed entities with the ability to view, analyse, compare and download market data on the trading activity of individual stocks, sectors and indices. Listed entities can view price, volume, broker trading activity and ASX company announcements for every ASX listed entity. It allows listed entities to compare their performance against peers or indices and package the information into a board report through the reporting module called sharepac. To date over 1,100 ASX listed entities have registered to access miraqle shares.
- ASX Review of draft notices of AGM - Listed entities must hold their AGMs within 5 months of their financial yearend. Under listing rule 15.1.7, draft notices of general meeting that contain resolutions for Listing Rules purposes must be submitted to ASX for review before they are sent to security holders.
- Carbon tax disclosure - Listed entities must consider the impact of the proposed carbon tax on their operations under their continuous disclosure obligations.
- Appendix 4D and 4E in annual and half-year reports - Information or documents given to ASX under Listing Rules 4.2A and 4.3A – that is, information identified as 'Results for announcement to the market' – "must be set out at the beginning of the document." If the relevant section is not prominently displayed at the front of the document, delays will occur in processing and release.
- Provision of audit review/report to ASX - If the accounts have been audited or subject to review, the audit report or review should be provided with the report.
- Non-business days - Timetables for corporate actions – including dividends, distributions, and entitlements issues – must take into account non-Business days that fall during the period when the corporate action will be running.
Sources of information for this document include: Australian Institute of Company Directors; Australian Securities and Investments Commission; Australian Securities Exchange; Chartered Secretaries Australia; Commonwealth Government; Freehills; LexisNexis; UK Ministry of Justice, University of New South Wales.