facebook Twitter LinkedIn RSS It’s now been (just) over a year since the 3rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (CGPRs) came into effect on 1 July 2014. All ASX listed entities whose financial year ended on 30 June should be considering how they (many for the first time), will now report against these updated Recommendations for the 2015 financial year. Some entities may have adopted the CGPRs prior to 1 July 2014 and have previously reported on their compliance with the CGPRs. In either case, all entities are currently in the dark on the extent to which institutional investors, advisers and analysts will use information disclosed (or not) in accordance with the CGPRs to challenge or reward boards over their corporate governance commitments at reporting time. Refresh on what has changed As explained in our previous blog pre-empting the changes, the new ASX CGPRs were completely re-written and re-ordered from the 2nd Edition (2010) which has led to many obvious and not so obvious changes. Key differences include: greater flexibility with respect to how you publish your Corporate Governance Statement: either in an Annual Report or on a public website; the requirement to lodge a new ‘Appendix 4G’, which is essentially a detailed checklist of each of the recommendations set out in the ASX CGPRs through which an entity must disclose whether...Read More
facebook Twitter LinkedIn RSS Earlier this year the Australian Securities Exchange (the ASX) released a consultation paper on proposed changes to Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B (GN 8). We wrote a blog that explained the changes proposed by that consultation paper. Now, the ASX has released a final updated version of GN 8, which took effect on 1 July 2015. Who should be reading the new GN 8? The ASX has released a variety of documentation to help explain changes it has made to the final GN 8. They include an updated version of the Continuous Disclosure: Abridged Guide. Demonstrating just how tricky entities and their advisers find the application of the continuous disclosure obligations under the listing rules, GN 8 is now 84 pages long. This length is in comparison to the more palatable 15 pages of the Abridged Guide. As part of the consultation feedback to the proposed changes to GN 8, the Australian Institute of Company Directors (AICD) pointed out that the increasing volume of GN 8 ‘is of some concern as this may impact its usefulness as a guide.’ In response to the AICD’s concern, the ASX refers to the Abridged Guide and notes that: the Abridged Guide is targeted primarily at directors and senior managers of listed entities; versus GN 8 which is targeted primarily at company secretaries, investor relations...Read More
facebook Twitter LinkedIn RSS ASIC has recently announced an approach to surveillance reviews which will include an examination of organisational culture. In addition, it has asked a Senate committee to consider laws that would allow it to punish individuals and companies for poor organisational culture. Poor culture is not industry-specific Although ASIC’s recent speeches have been directed at, and have used examples of, the practices of the financial services industry, the issue of managing organisational culture risk is common to all organisations. Our article ‘Why effective policy management is critical to organisational success’ provides guidance on developing a desirable corporate culture. In many ways, culture comes from above. The nature of an organisation’s culture is set by its leadership team – the board and senior management – through management, the execution of strategies, and practices that set the tone for an organisation. ASIC made this point last year when, in another speech, Mr Medcraft noted that directors should ensure that the compliance function strongly drives a culture of compliance. The bottom line is that ASIC is sending a message to directors that they have a duty not only to ensure the viable functioning of a business, but also to ensure that a culture of regulatory compliance, risk management and proper corporate governance exists and is enforced in their organisation. ASIC speeches ASIC’s concern about poor organisational culture has been repeatedly...Read More
facebook Twitter LinkedIn RSS The proposed second tranche of Australia’s AML/CTF regime is designed, amongst other things, to ensure that lawyers, real estate agents and jewellers are required to comply with the obligations under Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act). Whilst the failure to introduce this second tranche of reforms has been the elephant in the room for nearly 10 years, the recent media attention on large property transactions in Australia involving overseas investors has reignited this debate and applies considerable pressure on the Federal Government to act. The $39 million sale of Villa Del Mare in Point Piper, Sydney, caused controversy when its forced re-sale was ordered by the Federal Treasurer once it was discovered that the purchase by a Chinese national had allegedly breached the Government’s foreign ownership rules under the Foreign Acquisition and Takeovers Act 1975 (Cth) (the FAT Act). Under the FAT Act, a ‘foreign person’ must seek Government approval before acquiring an interest in certain types of residential real estate. On 9 June the Federal Treasurer announced that the Foreign Investment Review Board has 195 cases of potential breaches of the FAT Act under investigation – adding further ammunition to the argument for the scope of AML/CTF Act to be extended to ensure that all aspects of real estate transactions involving overseas investors are adequately regulated. Second tranche of regulation...Read More
Bank manager dismissed for romantic conflict of interest facebook Twitter LinkedIn RSS A branch manager at Westpac was dismissed after he failed to disclose a relationship with an employee that created a conflict of interest. He applied to the Fair Work Commission for relief under unfair dismissal provisions, but was unsuccessful. It must be noted that the basis for his dismissal was not having a relationship with an employee per se, but that he failed to disclose a relationship with an employee who was initially his direct report, and the consequences which flowed from that failure. Mr Mihalopoulos was a long-time employee of the Bank, being promoted through the ranks until he become the bank manager of a regional branch in 2012. In February 2014, he became involved in a romantic relationship with one of the employees at his branch, Ms A. Ms A reported directly to Mr Mihalopoulos. Both parties were married at the time the affair began. Mr Mihalopoulos and Ms A moved in together in March 2014. This relationship was kept from Mr Mihalopoulos’s employees, and from his supervisors. When asked by his manager on a number of occasions if he was in a relationship with Ms A, Mr Mihalopoulos denied the relationship. Under the terms of Mr M’s contract of employment, he was required to disclose to his employer any likely conflict of interest. He...Read More
Responsible Managers – Why Bother With Ongoing Professional Training and Development Once you Have an AFS Licence?
facebook Twitter LinkedIn RSS Unlike many other professionals, Responsible Managers (RMs) appointed under an Australian Financial Services (AFS) Licensee are not required by ASIC to complete a minimum hours of professional training and development each year. As anyone who’s applied for a new or varied Australian Financial Services Licence (AFSL) will know, ASIC requires detailed documentation to demonstrate the competency of each person appointed as a RM for the AFSL. This is to ensure that RMs satisfy the first leg of the competency requirements of s 912A(1)(e) of the Corporations Act 2001 (Cth) (the Corporations Act). Namely, that the licensee maintain its competence to provide the financial services covered by its AFSL. ASIC sets out in Regulatory Guide 105 the minimum qualifications levels and the years of relevant work experience for each RM at the application stage. However, when it comes to the second leg of maintainingthe competency requirements in the Corporations Act, ASIC takes a far less rigorous approach. Essentially, ASIC allows licensees to self-regulate how they maintain the ongoing competence of their RMs. This self-regulatory approach is broadly described in RG 105 as: AFS Licensees should have measures in place to ensure they maintain their organisational competence at all times, including: reviewing their organisational competence on a regular basis and whenever their RMs or business activities change; maintaining and updating the knowledge and skills of their RMs; and keeping records...Read More
facebook Twitter LinkedIn RSS Since its commencement almost 10 years ago, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) (the AML/CTF Act) has created a complex set of obligations for entities (reporting entities) required to implement AML/CTF programs. The AML/CTF Act, and associated Rules, are also heavily regulated by a well-resourced and well-funded regulator (AUSTRAC) so it is not an area to be taken lightly. However, significant events over the last few months have created a ‘perfect storm’ within the Australian AML/CTF landscape, requiring existing reporting entities to ensure that their AML/CTF Programs are watertight, robust and in line with regulator expectations. Failure to do so will result in lengthy and time-consuming regulator communications, increased likelihood of enforcement action and reputational damage within the market. 1. Poor Scorecard for Australia The recently released Financial Action Task Force (FATF) report on Australia’s AML/CTF regime provides feedback on the effectiveness of measures put in place within Australia to address global standards. Let’s be clear from the outset: the report shows a fair bit of room for improvement. After the adoption of the AML/CTF Act in 2006, the creation of an ever-expanding list of additional AML/CTF Rules (71 chapters and counting), annual compliance reporting, internal/external Independent Review requirements and a very active regulator, FATF still found that Australia was ‘compliant’ or ‘largely compliant’ in only 24 of its 40 recommendations. This is...Read More
facebook Twitter LinkedIn RSS On 6 March 2015 the Australian Securities Exchange (the ASX) released a consultation paper (the Paper) on proposed changes to Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B (GN 8). The changes expand upon the existing ASX guidance given in relation to analyst and investor briefings, analyst forecasts, consensus estimates and earnings surprises. The Australian Securities and Investments Commission was consulted by ASX about the changes. The consultation period closed on Friday 24th April and the ASX received submissions from seven different entities, a mix of both publicly listed companies, law firms and industry associations (Submissions). Not all the feedback was positive. Why the changes? In the Paper, the ASX acknowledges that GN 8 was only recently subject to a major re-write in May 2013. The re-write included substantially updated materials on earnings guidance, de facto earnings guidance, earnings surprises and correcting analyst forecasts. But ‘developments since then have indicated to ASX that listed entities and their advisers would benefit from further guidance in these areas.’ One such development was the imposition of a $1.2 million fine on Newcrest for its well-publicised poor continuous disclosure practices. The release of ASIC Report 393: Handling of Confidential Information, which deals with the release of confidential information by ASX listed entities in investor and analyst briefings and unannounced corporate transactions, was another development. Earnings surprise The majority of...Read More
FATF Mutual Evaluation Report on Australia’s AML/CTF Regime – hould it be Expanded to Include Lawyers and Real Estate Agents?
facebook Twitter LinkedIn RSS The recently released Financial Action Task Force (FATF) report on Australia’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) measures provides both positive and critical feedback on the measures put in place within Australia since the regime began (almost 10 years ago now!). In terms of credibility, the FATF sets the regulatory and operational standards and measures for combating money laundering (ML), terrorist financing (TF) and other related threats to the integrity of the international financial system. The FATF has developed a series of Recommendations (40) that are recognised as the international standards for combating ML/TF. Between July 2012 and August 2014 FATF spent some time analysing the level of compliance with these Recommendations within Australia. The output from this FATF visit is a lengthy report spanning 198 pages. However, the findings are extremely useful for existing reporting entities within Australia, providing a good marker in terms of current expectations which may ultimately become the expectations of the domestic regulator, AUSTRAC. In addition, the FATF report is also critical of the level of effectiveness of Australia’s AML/CTF system in several areas, providing recommendations on how the system could be strengthened. Forward thinking reporting entities should be aware of this constructive feedback, as should those entities currently not subject to existing AML/CTF requirements, but who should expect to be over the coming years through a second tranche of...Read More
Tribunal finds morning sickness can be a disability facebook Twitter LinkedIn RSS In this edition: tribunal finds morning sickness can be a disability; David v Goliath: employee loses against IBM in court; and ‘conditions akin to slavery’ – employee awarded $186,039 from former employer. Tribunal finds morning sickness can be a disability The Victorian Civil and Administrative Tribunal (the VCAT) has recently decided that in some cases, extreme morning sickness from pregnancy can be considered a disability, and must be accommodated by employers. This case should alert employers to their obligations under anti-discrimination legislation. The facts Ms B worked as a full time sales consultant for a phone company in a retail store which was owned by the company TBS. Prior to discovering her pregnancy, she had a history of taking sick leave from work which, despite many medical certificates being produced, incited doubt amongst her colleagues about their legitimacy (an apparent Facebook post from the beach on a day she took sick leave was referred to in proceedings). In early September 2013 Ms B discovered she was pregnant which explained her recent ill health as being morning sickness. Throughout September, she was absent often from work. Her symptoms included frequent vomiting, dizziness and feeling faint. She was diagnosed with hyperemesis gravidarum, the most severe form of morning sickness (Kate Middleton had the same condition). Ms B previously had...Read More