Thursday, 23 March 2017

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.

Wednesday, 15 March 2017

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.

Wednesday, 1 March 2017

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.

Friday, 17 February 2017

Crowd funding given the nod by Senate committee

We were pleased to see some progress on the crowd-sourced equity funding (CSEF) laws this week, with the most recent Bill passing the House of Representatives and a recommendation from the Senate committee that it be passed by the Upper House, subject to a review after two years.

Unfortunately it remains a contentious Bill, with Labor continuing to push for changes to the laws and releasing a dissenting report.  Labor does not pull any punches, describing the approach to the CSEF laws as having ‘limited scrutiny of a flawed bill in an effort to rush through legislation that is likely to be superseded by a revised framework’.  Even if the Bill is finally passed, it will continue to be an area to watch for further changes.

In particular, there are ongoing objections to the ‘public company’ requirement from an number of stakeholders and industry participants.

For a refresher on the anticipated rules for CSEF see our prior blogs:

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.