INSIGHT

Nucleus – corporate law developments: ASIC leadership changes and other updates

By Vijay Cugati
Mergers & Acquisitions Technology

Key developments 10 min read

  • ASX advises constitution amendments for CHESS replacement and launches consultation on oil and gas reporting amendments;
  • ACCC teams up with UK and German competition regulators on merger control; Federal Court upholds record diesel emissions penalty;
  • three new appointments and 14 reappointments to the Takeovers Panel;
  • Fair Work Commission commences review of casual provisions in modern awards; and
  • consultation on licensing of proxy advisers; doubts over changes to the Foreign Financial Services Provider regime.

What you need to know

ASIC: Leadership changes

The Treasurer has announced the appointment of Joe Longo as the next Chair of ASIC, and the appointment of Sarah Court as an additional Deputy Chair. The appointment sees Mr Longo return to ASIC, where he was previously a National Director, Enforcement in 1996–2000, with responsibility for the national co-ordination and direction of ASIC’s enforcement and litigation activities. He was most recently a lawyer, with expertise in corporate law, financial services, governance and regulation both in house and in private practice. Observers will be keen to see if the appointment of a lawyer as Chair will result in any change to ASIC's overall regulatory stance and approach to enforcement.

Ms Court will join ASIC from the ACCC, where, in her capacity as Commissioner, she has overseen the ACCC’s enforcement and litigation program, and is Chair of the Commission’s Enforcement Committee, Compliance Committee, Consumer Data Right Committee and Legal Committee.

The appointees will take on their roles under a new 'Statement of Expectations' to be articulated by the Treasurer. The Statement of Expectations will be released after the new Chair and Deputy Chair commence. The Treasurer has indicated that the Statement will, among other things, outline the Government's expectation that ASIC will support Australia’s economic recovery from the COVID pandemic.

ASX: CHESS replacement readiness; consultation on oil and gas reporting amendments

The ASX has released an Issuer Update in anticipation of the implementation of the CHESS replacement. The update recommends that listed entities amend their constitutions or trust deeds to remove restrictions on the number of joint holders of securities, and to ensure that elections received via the CHESS replacement are recognised as valid under applicable plan rules of any dividend reinvestment and bonus share plans.

The ASX released a consultation paper in relation to proposed changes to oil and gas reporting requirements in the ASX listing rules. The proposed changes would amend the framework governing reporting of petroleum resources and introduce a prohibition on reporting certain forecast financial information. Submissions are due by 28 May 2021.

The ASX also released its response to consultation feedback on amendments to the ASX Clear (Futures) Operating Rules to introduce a framework for default management auctions of exchange traded derivatives and to extend the existing default indemnity. The ASX intends to make minor changes to the rules, which are expected to be implemented in the third quarter of 2021.

ACCC: ACCC teams up with UK and German competition regulators in merger control; Full Federal Court upholds record Volkswagen diesel emissions penalty; Federal Court finds Google's approach to collection of location data breaches Australian Consumer Law

The ACCC, the UK's Competition and Markets Authority and Germany's Bundeskartellamt have published a landmark joint statement on merger control enforcement. The joint statement signals the intention of international competition regulators to closely scrutinise merger applications in markets that are highly concentrated, or dynamic and fast-paced. The statement highlights the importance of effective merger control as a first line of defence – once a merger is approved and a merged entity develops market dominance, there is often little competition agencies can to do address the situation retrospectively.

In enforcement news:

  • The Full Federal Court dismissed Volkswagen's appeal against a $125 million penalty imposed for representations made in relation to diesel emissions (the highest penalty ever handed down for breaches of the Australian Consumer Law). The Full Court upheld the trial judge's decision to reject an agreed $75 million penalty between the ACCC and Volkswagen, with the decision serving as a reminder of the court's discretion to reject agreed settlements that do not achieve specific and general deterrence. For more detail on the implications of the decision, see our Insight: Your jointly proposed pecuniary penalty may not be appropriate.
  • The Federal Court found that Google engaged in misleading conduct and made false representations to certain Android mobile device users because of the way it presented its collection, storage and use of users' personal location data in its privacy statements. The ACCC's case was the first in the world to probe Google's approach to the collection of users' location data. You can read more about this in our Insight: Federal Court makes landmark decision on data transparency.
  • The ACCC closed its investigation of Google's proposed acquisition of FitBit, saying that it is now treating the matter as an enforcement investigation of a closed merger. ACCC Chair Rod Sims said, 'depending on the results of our investigation, we will consider whether to take legal action on this matter'.

In merger news:

  • The ACCC cleared MYOB's proposed acquisition of GreatSoft, concluding the transaction is not likely to substantially lessen competition. MYOB and GreatSoft both supply practice management software to medium-to-large accounting firms (although MYOB offers a desktop solution while GreatSoft offers a cloud-based solution). The ACCC concluded that GreatSoft's growth has been limited since it entered the market, and it would likely face challenges expanding its small customer base in the short to medium term if the acquisition does not go ahead.
  • The ACCC has not opposed Innovation Holdings Australia increasing its holding from 29% to 35% of shares in iSelect, concluding the acquisition will not substantially lessen competition. Innovation Holdings Australia owns the 'compare the market' comparison website, which competes with iSelect to offer to consumers a comparison service covering insurance, energy and financial products and services.
Takeovers Panel: Treasurer appoints three new Panel members and reappoints 14 existing Panel members; Panel releases results of stakeholder survey

The Treasurer appointed three new members to the Panel: Marina Kelman, Sandy Mak and John Sheahan QC. (Mr Sheahan re-joins the Panel, having previously been a member in 2014–2020.) The Treasurer has also reappointed 14 existing members before the expiry of their current terms. The three-year appointments and reappointments take the Panel to 49 members.

The Panel released the results of its 2020 stakeholder satisfaction survey involving 146 stakeholder responses. The findings indicated that 91% of stakeholders surveyed were either very satisfied or somewhat satisfied with the Panel's performance, remaining relatively stable since the survey was last conducted in 2015. In particular:

  • a large majority of stakeholders perceives the Panel to be effective (although there is some disagreement among stakeholders in relation to it appropriately taking into account the commercial drivers and interests of parties); and
  • most aspects of the Panel's processes, as well as the Panel's executive, are rated positively.

The 2020 survey also showed a significant decline (against the 2015 survey) in the number of stakeholders who:

  • perceive the Panel as conducting proceedings too often or not often enough (as opposed to the right amount); and
  • view the Panel as paying too much attention to ASIC's views (although 16% of stakeholders still hold this perception).
Employment: Fair Work Commission commences review of casual provisions in modern awards; Federal Government responds to AHRC's Respect@Work Inquiry

The Fair Work Commission has published a statement setting out its proposed review of modern awards in response to recent changes to define 'casual employee' in the Fair Work Act 2009 (Cth). Recent amendments to the Fair Work Act dealing with casual employees require the Fair Work Commission to review terms of modern awards that deal with:

  • the definition or description of casual employment;
  • the circumstances in which employees are to be employed as casual employees;
  • the manner in which casual employees are to be employed; or
  • conversion of casual employment to another type of employment,

by 27 September 2021.

The Commission is required to consider whether such award terms are consistent with the amendments to the Fair Work Act, and make any necessary changes to those awards where those terms are inconsistent with the Fair Work Act or otherwise create difficulty or ambiguity.

The review will be conducted in two stages, and consider the following modern awards as a priority:

  • General Retail Industry Award 2020;
  • Hospitality Industry (General) Award 2020;
  • Manufacturing and Associated Industries and Occupations Award 2020;
  • Educational Services (Teachers) Award 2020;
  • Pastoral Award 2020; and
  • Fire Fighting Industry Award 2020.

The second stage of the review will cover the remaining modern awards in tranches.

The Commission published a discussion paper that sets out 32 questions for consideration. The questions posed by the discussion paper primarily address the interaction between the award terms and the amendments to the Fair Work Act. Submissions were due by 24 May 2021.

In other news, in response to the Australian Human Rights Commission's (the AHRC) Respect@Work Inquiry, the Federal Government has released a report titled 'A Roadmap for Respect: Preventing and Addressing Sexual Harassment in Australian Workplaces'. In the Report, the Government agrees in full, in part or in principle to all 55 recommendations set out in the Respect@Work Inquiry.

Relevantly, the Government has committed to amending the Fair Work Act and Fair Work Regulations to expressly include sexual harassment within the definition of 'serious misconduct', and to clarify that sexual harassment is a valid reason for dismissing an employee.

The Government does not propose to introduce a new 'stop sexual harassment order', as recommended by the AHRC; however, it does intend to amend the Fair Work Act so that a 'stop bullying order' is also available for cases of sexual harassment.

The Report also proposes amendments to the Australian Human Rights Commission Act 1986 (Cth) to clarify that victimisation under the Sex Discrimination Act 1984 (Cth) can form the basis of a civil action for unlawful discrimination, and to extend the period before the President of the AHRC can terminate a complaint under the Sex Discrimination Act from six to 24 months after the alleged unlawful discrimination took place.

News & other developments

Consultation on transparency of proxy advice

The Federal Treasury has released a consultation paper, 'Greater transparency of proxy advice'. The consultation paper notes that while proxy advisers are required to hold an AFS licence for advice to wholesale investors regarding votes that relate to dealings in financial products, proxy advisers regularly also advise on other resolutions (such as remuneration reports and board appointments) that are not covered by the AFSL regime. The consultation paper seeks feedback on the adequacy of the current regulatory settings, and on three potential reforms in particular, which are around:

  • measures designed to ensure independence between super funds and proxy advice;
  • 'facilitating engagement' between companies and proxy advisers before the release of proxy reports; and
  • whether AFS licensing should be required for the provision of all proxy advice.

Proxy advisers and listed entities alike will keenly await the results of the consultation.

Federal Budget puts changes to the Foreign Financial Services Provider regime in doubt

In the last edition of Nucleus, we reported on impending AFS licence changes for foreign financial service providers, with the 'limited connection relief' and 'sufficient equivalence relief' set to come to an end in March 2022. The 2021–22 Federal Budget has put those changes in doubt, with the budget papers signalling the Government's intention to 'consult on options to restore' the current limited connection relief and sufficient equivalence relief, and to 'consult on options to create a fast-track licensing process' for foreign financial service providers. The change in approach follows lobbying by industry bodies opposed to the new regime. ASIC is yet to release a consultation paper in response to the Government's budget position; however, these developments are likely to see foreign financial service provides press pause on their efforts to prepare for the new regime until the position becomes clearer. For more information on the changes to the regime, see our Insight: Surprising 2021-22 Budget backflip leaves the new Foreign Financial Services Provider regime in limbo.