Tuesday, 29 November 2016

Equity crowd funding back on the agenda

Following on from our post last year (Crowd funding: no joy for start-ups?) on crowd-sourced equity funding (CSEF), it is good to see that the Corporations Amendment (Crowd-sourced Funding) Bill 2016 (Cth) (2016 Bill) was presented before the House of Representatives on Thursday, 24 November 2016 by Treasurer Scott Morrison.  This is the second attempt by the Federal Government to introduce CSEF legislation after the Corporations Amendment (Crowd-sourced Funding) Bill 2015 (Cth) (2015 Bill) lapsed following the double dissolution from the election earlier this year.

Wednesday, 16 November 2016

ASIC’s industry funding model – the long and the short of it

Last week Treasury released a proposals paper seeking feedback and comments on the revised model for the proposed industry funding of ASIC.  The proposals paper sets out an updated version of the model first proposed by Treasury in late 2015.  The updates are a result of extensive consultation with industry.

Round table meetings are scheduled during the week commencing 28 November 2016 with the formal consultation period scheduled to end on 16 December 2016.

Draft legislation is expected to be available in March 2017, with the model to commence in the second half of 2017.  The first payable invoices are expected to be issued in January 2019 to recover ASIC’s 2017-18 costs.

Thursday, 3 November 2016

ASX strikes a balance for earlier stage IPOs

Following a lengthy consultation process, ASX yesterday released its Response to Consultation on updating its admission requirements and associated Guidance Notes for listing on the exchange.

The proposed changes (which were originally published on 12 May 2016), received a strong level of interest from a range of stakeholders including investors, listed companies, brokers and corporate advisory groups, with over 56 written submissions being provided to ASX.  This feedback, together with the feedback provided in a number of consultation meetings held by ASX, has shaped the final package of amendments.  The final position appears to have struck a balance which may assist early stage technology and innovation entities looking to list on the exchange.

Wednesday, 12 October 2016

Trading inside the lines – the importance of a clear and effective trading policy

There has been a string of high profile insider trading cases in the media recently.  In the last year alone, sentences of imprisonment have been imposed on Oliver Curtis (two years), Lucas Kamay, former NAB banker (seven years and three months), and former executive of Chinese miner Hanlong, Steven Xiao (eight years and three months).

Tuesday, 4 October 2016

Mixed reception for potential R&D tax incentive changes

Last week, the Federal Government released a report of its review of the R&D tax incentive (https://www.business.gov.au/assistance/research-and-development-tax-incentive/review-of-the-randd-tax-incentive).  The review was commissioned as part of the Government’s National Innovation and Science Agenda and was informed by submissions and consultations with leaders of business and research.

Monday, 26 September 2016

ASIC on media watch for IPO publicity

Following on from ASIC’s report on due diligence practices for IPOs (see our earlier blog in July 2016, IPO due diligence under the spotlight), ASIC has continued this work stream with its latest review in Report 494 focused on marketing practices for IPOs.

Monday, 5 September 2016

ASIC targets 2016 – are you in the spotlight?

ASIC has recently given an indication of its targets for regulatory surveillance and action.  In releasing its half year report on the regulation of corporate finance: January to June 2016 (Report 489), ASIC commented on current trends in fundraising and mergers & acquisitions. Some practical insights from the report are summarised below.

Wednesday, 24 August 2016

Misleading and deceptive conduct by directors - a timely reminder of the repercussions of making a misleading market announcement

A recent prosecution by ASIC against an ASX listed mining exploration company serves as a timely reminder about the repercussions of making misleading market announcements, not only for the company, but also for its directors.

On 19 August 2016, the Federal Court handed down a decision which saw two executive directors of Padbury Mining Limited (Padbury), Gary Stokes and Terence Quinn, being banned from managing corporations for three years and fined $25,000 each for breaching their disclosure obligations as directors.  They were also ordered to pay ASIC’s costs of $200,000.

Friday, 19 August 2016

A case of déjà vu as ASIC continues to request realism and clarity in financial reports

Every six months, ASIC publishes its areas of surveillance on financial reports soon to be lodged by reporting entities.

For 30 June 2016, ASIC has reiterated its focus that financial reports clearly articulate the approach to valuation of assets and accounting policy choices.  This is continuing the theme from ASIC’s review of 31 December 2015 financial reports when ASIC Commissioner, John Price, stated:
The largest number of our findings continue to relate to impairment of non-financial assets and inappropriate accounting treatments. Directors and auditors should continue to focus on values of assets and accounting policy choices.
ASIC’s media release mirrors its requests from previous financial reporting periods, and asks for directors to apply ‘realism and clarity’ to their financial reports.  ASIC is particularly concerned with companies:

Tuesday, 2 August 2016

ASX continues to refine proposed changes to admission requirements

In an earlier post, ASX to take a harder line on early stage IPOs, we highlighted some of the key changes proposed by ASX to the admission requirements for a listing on the exchange.

The ASX consultation process for the proposed amendments closed on 24 June 2016, with the changes initially anticipated to take effect from 1 September 2016.  The transition date has, however, been delayed to 19 December 2016 following extensive industry feedback to ASX.

The level of feedback perhaps reflects a concern that the changes, if adopted, are likely to have a significant impact on small cap IPO candidates and back-door listings.

Thursday, 21 July 2016

IPO due diligence under the spotlight

A recent report released by ASIC (Report 484) provides some interesting insights on ASIC’s focus when reviewing an IPO prospectus and considering the background due diligence undertaken in the preparation of the prospectus.  The report was based on ASIC’s review of due diligence practices for 12 IPOs, with 10 being for small to medium-sized issuers.

Some particular points of note are:

Friday, 10 June 2016

Live from the BIO International Convention

As an attendee at the 2016 BIO International Convention in San Francisco (the world’s largest biotech and life sciences convention), Ben Wood (Senior Associate, Corporate Advisory) thought it would be useful to give a quick overview of some key themes arising from the convention: 

Tuesday, 17 May 2016

ASX to take a harder line on early stage IPOs

On 12 May, ASX released a consultation paper on its proposed changes to the admission requirements for a listing on ASX.  The media release and consultation paper can be found here.

On the same day, ASIC also released its own consultation paper and updated guidance to improve disclosure of historical financial information in prospectuses.  ASIC and ASX have worked closely in developing their respective papers.

ASX' key proposals include:

Equity incentive arrangements - is it time to review yours?

The lead up to the end of the financial year is the peak period for most organisations yearly budgeting and business planning.  Given this, it is an opportune time for companies to review key management remuneration including equity components. 

In particular, as part of their annual budgeting and business planning, companies should ensure that current equity incentive arrangements continue to be appropriate to reflect any updated focus of the organisation and having regard to revised budgets and KPIs for the coming financial year.

To ensure existing equity incentive arrangements remain relevant and reflective of the organisation’s goals, companies should:

Tuesday, 10 May 2016

Class actions – can investors now sue without proving direct reliance?

The NSW Supreme Court recently handed down its decision in Re HIH Insurance Limited (In Liq)[1]. This long-running saga began with the collapse 15 years ago of Australia’s (then) second largest insurance company, HIH Insurance Limited, and has since seen a royal commission, the imprisonment of various senior management figures, and losses totalling more than $5 billion.

This decision has attracted a lot of attention across the financial and corporate sectors.  The decision is the first in Australia to explicitly accept ‘indirect market-based causation’ in cases involving misleading or deceptive conduct.  This will potentially pave the way for investors to bring claims against listed companies who misled the market, without needing to establish direct reliance on the misleading information.

The case was brought by several shareholders of HIH who bought shares in the company in the three years leading up to its collapse.  In the case the parties agreed that HIH had released misleading financial results for the financial years ending 30 June 1999 and 2000, which overstated the company’s profits by some $92 million and $108 million respectively.  These overstatements related to the accounting treatment of complex reinsurance contracts entered into by subsidiaries of HIH.

Friday, 8 April 2016

Culture Shock

Greg Medcraft, the Chairman of the Australian Securities and Investments Commission (ASIC), in a recent speech reiterated ASIC’s focus on the importance of culture within corporate organisations.

In a previous blog, Organisational culture: ASIC's renewed focus, we discussed Commissioner, Greg Tanzer’s, earlier speech on the importance of organisational culture, and hinting at a renewed emphasis by ASIC to target poor culture.  Mr Medcraft has now re-affirmed ASIC’s targeted focus.

Regulatory intervention
Mr Medcraft acknowledges that culture cannot be regulated with black letter law.  Instead, it will be incorporated into ASIC’s risk based surveillance reviews.

Coinciding with his speech, ASIC also released ASIC report 474, which focuses on corporate culture within the funds management industry.  The report pinpoints several indicators of culture which will likely be at the forefront in ASIC’s surveillance.  ASIC notes that, while the indicators are not necessarily indicative of poor conduct, they may be suggestive of circumstances when ASIC may intervene.  These indicators include: