New consultation paper for liquidators
On 29 February 2008, ASIC released a consultation paper in relation to new insurance requirements for registered liquidators. The new requirements were introduced into the Corporations Act 2001 (Cth) by the Corporations Amendment (Insolvency) Act 2007.
The new requirements require liquidators to hold professional indemnity and fidelity insurance. It will no longer be sufficient for liquidators to maintain a security/performance bond with ASIC or rely on a no action position under RG 33 Security Deposits as a substitute to private insurance. Liquidators will be responsible for assessing and maintaining adequate insurance.
The requirements have immediate effect for newly registered liquidators but will come into force for previously registered liquidators from 1 July 2008.
Click here to access a copy of ASIC's consultation paper.
ASX: Disclosure and Trading Halt Guidance
On 29 February 2008, ASIC, in cooperation with the ASX, released two Companies Updates to assist listed entities ensure compliance with their disclosure obligations in relation to covenants in financing documents and directors' margin loans, and in relation to disclosing reasons for trading halts.
Click here to access copies of Companies Update 01/08 and 02/08 and ASIC's press release.
Update on Basel II
On 26 February 2008, APRA released a speech entitled Update on Basel II. The speech was presented by APRA to the Credit Risk Management Conference. The speech provided an update on some of the outstanding issues in relation to the implementation of Basel II in Australia.
Click here to access a transcript of the speech.
FSA speech on principles-based regulation
The Financial Services Authority (FSA) has also released a speech by its chief executive entitled Judgements on judgements – Retail firms and principles-based regulation which was delivered to the Retail Firms Conference on 27 February 2008.
Click here to access a transcript of the speech.
ACCC claim to public interest immunity privilege fails
On 19 February 2008, the Federal Court made an interlocutory decision relating to privilege in the proceedings brought by Cadbury Schweppes Pty Ltd against Amcor Limited (to which Visy Industries Holdings Pty Limited and related companies have been joined). The ACCC has sought to prevent production by Visy and Amcor of various witness statements and proofs that were created in connection with the ACCC's earlier price-fixing proceedings against Visy, on the basis that the documents are subject to legal professional privilege and/or public interest immunity privilege.
Cadbury is seeking to discover these documents in its action for damages. The court held that legal professional privilege in respect of six Amcor witness statements exists and had not been waived. However, the court held that any legal profession privilege in respect of 111 witness proofs was waived when they were filed and served on Visy. A further claim in respect of eight of the witness proofs as to public interest immunity privilege (the alleged public interest being the encouragement of whistleblowers) failed. The Court held that the ACCC had failed to show that disclosure would harm a real public interest.
However, as the witness proofs are subject to an implied undertaking by Visy that they will only be used for the purpose of the proceeding between the ACCC and Visy, Visy may still have grounds to refuse to produce these proofs to Cadbury. The parties have been ordered to file submissions as to whether Visy is still bound by its undertaking and, if so, whether special circumstances exist such that Court should release Visy from its undertaking.
Click here to read the decision in full.
Allegiance Mining NL – declaration of unacceptable circumstances
On 22 February 2008, the Takeovers Panel (Panel) made a declaration of unacceptable circumstances against Allegiance Mining NL (Allegiance) in relation to an off-market takeover bid for its ordinary shares by Zinifex Australia Limited (Zinifex).
The Zinifex offer was scheduled to close at 7:00pm on Friday 8 February 2008 but on the afternoon of 8 February, Zinifex lodged with ASIC a notice of variation proposing to extend the period of offer until Friday 22 February 2008. Zinifex emailed the notice to Allegiance at approximately 7:00pm on 8 February and sent a copy to the ASX which appeared on the ASX website at 7:30pm that same evening. The circumstances meant that Allegiance shareholders who accepted the Zinifex offer between 5:00pm and 7:30pm on 8 February were not aware of the notice of variation.
The Panel held this to be unacceptable. The Panel considered that any acquisition of control over voting shares in Allegiance should have taken place in an informed market. Shareholders should have had enough information to make an informed decision as to their acceptance of the offer. By not informing Allegiance of the notice of variation immediately, there existed the possibility that some shareholders made their acceptance without notice of important information.
Click here to access the Panel's media release, declaration and orders.
Federal government releases principles on foreign government related investment in Australia
On 17 February 2008, the federal Treasury released guidelines for foreign government investment proposals in Australia. The guidelines apply to all investments by foreign governments and their agencies, including those of sovereign wealth funds (SWFs). The guidelines outline six principles by which proposed investments by foreign government entities will be measured.
Pursuant to Australia's foreign investment policy and the Foreign Acquisitions and Takeovers Act 1975 (Cth)(Act), certain investments must be notified to the Treasurer. Under the Act, the Treasurer may prohibit investments that are deemed to be contrary to Australia's 'national interest'. The Principles Guiding Consideration of Foreign Government Related Investment in Australia set out supplementary criteria that must be considered in relation to foreign government investment proposals.
In considering foreign government investment proposals the government will now consider whether:
- an investor's operations are independent from the relevant foreign government
- an investor is subject to and adheres to the law and observes common standards of business behaviour
- an investment may hinder competition or lead to undue concentration or control in the industry or sectors concerned
- an investment may impact on Australian government revenue or other policies
- an investment may impact on Australia's national security
- an investment may impact on the operations and directions of an Australian business as well as its contribution to the Australian economy and broader community
The principles reflect the main considerations which are already taken into account in assessing the national interest implications of foreign government investments and in many respects reflect existing features of the policy and Act.
The Treasurer has sought to reassure investors that Australia remains welcoming of foreign investment and that the central objective of the new guidelines is transparency, not protectionism.
Click here to view the Treasury's press release.
Draft Corporations Amendment Regulations released for public comment
The federal Treasury has released draft regulations which propose to amend the Corporations Regulations 2001 (Cth). The amendments would remove the requirement for managed investment schemes to notify ASIC of the top 20 interest holders as part of its annual review.
The Treasury has called for public comment on the draft regulations by 28 March 2008.
Click here to access the Treasury's release and view the draft regulations and draft explanatory statement.
Federal government proposes New Zealand loop hole be closed
The federal government's Minister for Superannuation, Senator Nick Sherry, has announced that legislation is to be introduced into Parliament to stop persons disqualified from managing a company in New Zealand from doing so in Australia.
Senator Sherry confirmed that the government intends to introduce the new laws in the next few months.
Click here to view the Minister's press release.
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