Equity crowd funding finally past the post - but is it a dodo?

It is good to see that the equity crowd funding laws have finally been cleared for Australia, with the Senate having passed the Bill on Monday. This was following finalisation of the debate on proposed cooling off rights for retail investors (which was ultimately extended from 48 hours to five days). The laws allow unlisted public companies with less than $25 million in assets and turnover to raise up to $5 million in funds in this way.

As per our earlier blogs, a key potential chink in the armour of the new laws is its limited application to public companies and not proprietary (private) companies, which represent 99% of small businesses.

This has been recognised by various stakeholders, including Labor, with Opposition digital economy spokesman Ed Husic suggesting that amendments will be required in the near term and suggesting that “any future changes will make today's new dodo of a system extinct within the year, as smaller business opt for a better alternative.”

The heat is now on Directors when it comes to climate change

In a recent ASIC liaison meeting, a number of corporate governance items were flagged as being a current focus of ASIC.  Of particular interest is the emerging focus on climate change risk management by directors and implications for directors’ duties.

The opinion ‘Climate change and directors’ duties’ published by the Centre for Policy Development in October 2016 (download here) promoted wide spread discussion about the implications of climate change risk for directors.  It argues that Australian company directors who fail to consider such risks now could be found liable for breaching their duty of care and diligence under section 180 of the Corporations Act in the future.

Deeds of Cross Guarantee

New audit relief instrument requires deed changes for new companies

ASIC recently revised Class Order 98/1418, which provides for financial reporting relief to wholly-owned subsidiaries that have entered into a deed of cross guarantee.  As part of the revision, ASIC have also released a new pro forma deed of cross guarantee to replace the previous pro forma.

Existing deeds of cross guarantee (signed before the release of the new pro forma on 28 September 2016) do not necessarily need to be updated, however, ASIC has confirmed that, where parties wish to add a new entity to the group under the deed (so that it can obtain the audit relief), modification of the existing deed will be required by either:

• all parties executing a new deed in the form of the new ASIC pro forma, or
• varying the existing deed to reflect the new ASIC pro forma.

McCullough Robertson have been liaising directly with ASIC on these requirements and can assist with new pro forma and variation requirements.  For groups whose financial year ends on 30 June, the new deed will need to be in place and any new entities added to the new deed before that time.

Aaron Dahl