As we approach year end, we thought it would be helpful to summarise some recent regulatory issues.
 
Proposed changes to the ASX Listing Rules:

• Earlier this week the ASX released a consultation paper entitled “Proposed Listing Rules Changes: online forms, notification of security issues and corporate action timetables”. The proposed changes are largely procedural and relate to new and updated ASX forms and clarifications to notification obligations. The consultation period will remain open until 24 December 2020 with proposed changes slated to be implemented on 20 March 2021.  We will provide a further update once the final rule amendments are released in February 2021.

Current status of temporary COVID-19 measures:

• Financial reporting:  Unlisted and listed entities will be able to take one additional month to lodge financial reports for year ends from 31 December 2019 to 7 January 2021. Listed entities will be required to inform the market when they rely on the extended period for lodgement. These entities may also find it desirable to explain the reasons for relying on the extended deadlines. ASX proposes to issue a class waiver to give effect to these extended reporting deadlines. The ASX waiver relief will impose two conditions that listed entities must satisfy to get the benefit of the extension to the lodgement date for their audited or reviewed accounts under Listing Rules 4.2B and 4.5.1, in particular, that an entity relying on the relief must:
   
  • Provide unaudited or unreviewed accounts and the information required by Appendix 4D or Appendix 4E (as applicable) to the market by the usual lodgement deadline.
  • At the same time (or before) it lodges its unaudited or unreviewed accounts with ASX, it announces to the market not only that it is relying on the ASIC relief to extend the lodgement date for its audited or reviewed accounts, but that it will also immediately make a further announcement to the market if there is a material difference between its unaudited or unreviewed accounts and its audited or reviewed accounts.

ASX has also asked that, where possible, listed entities endeavour to lodge their audited or reviewed accounts with ASX within the normal listing rule deadlines.

• Annual General Meetings (AGMs): ASIC has extended its ‘no action’ position where public companies do not hold their AGM within five months after the end of financial years that end from 31 December 2019 to 7 January 2021, but do so up to seven months after year end. This means that companies with a 31 December 2020 year end will have until 31 July 2021 to hold their AGM.

• ASIC’s temporary ‘low doc’ relief for capital raisings: ASIC’s relief is currently due to expire on 1 January 2021. As a reminder, under the relief, certain ‘low doc’ offers (including rights offers, placements and share purchase plans) can be made to investors without a prospectus, even if they do not meet all the normal requirements. The relief also applies to issuing cleansing notices.  

• ASX temporary capital raising relief: ASX chose not to extend its class waivers earlier this week so entities can no longer rely on the temporary capital raising relief.

• Temporary safe harbour relief: The Federal Government’s relief which temporarily relieved directors of their duty to prevent insolvent trading during the COVID-19 pandemic is due to expire on 31 December 2020. This means that directors will not be protected by 588GAAA for debts incurred after that date. Accordingly, from 1 January 2021, directors are at risk of personal liability if the company continues to trade while insolvent.

• Foreign investment threshold – Since 29 March 2020 the monetary threshold for the screening of all foreign investments in Australian has been nil. The draft Foreign Investment Reform Bills (discussed further below) propose to reinstate the monetary thresholds on and from 1 January 2021 but a final decision on whether the thresholds will be reinstated has not yet been confirmed by the Federal Government. We will provide an update on this once a decision has been made.

Other changes in the pipeline:

• Foreign investment reform:  A number of Foreign Investment Reform Bills are currently before Parliament.  If passed, the Bills will give effect to major reforms to the foreign investment review regime by (amongst other things) introducing a new national security review and giving the Treasurer as a last resort the ability, in extraordinary circumstance, to issue a divestment order where there is no other remedy for a national security risk. Under the reforms, the Treasurer will also have strengthened enforcement powers through increased penalties, directions powers and new monitoring and investigative powers. In addition, the reforms propose to establish a new register of foreign owned assets to record all foreign interests acquired in Australian land; water entitlements and contractual water rights; and business acquisitions that require foreign investment approval. Assuming legislative assent is obtained, the reforms will apply from 1 January 2021. We will provide a more detailed update once the legislation has been passed.

• New insolvency reforms for small businesses: The Federal Government has also released draft legislation (modelled on US bankruptcy laws) in respect of insolvency reforms aimed to assist Australian small businesses in restructuring to maximise their chances of survival following the challenges of COVID-19. Assuming legislative assent is obtained, the reforms will apply from 1 January 2021 (following expiry of the temporary measures at the end of the year) and will apply to small businesses with liabilities of less than $1 million. Again, we will provide an update once the results of the consultation process and legislation are finalised. In the meantime, it’s important that any business facing solvency issues seek legal advice as early as possible.

• Permanent changes to virtual meetings and electronic signatures – as mentioned in our article on 23 October 2020, the Federal Government released draft legislation to deal with virtual meetings and electronic signature. There has been no further update since the consultation period closed on 13 November 2020.

 
If you have any questions in relation to any of the issues raised in this article, please do not hesitate to contact us at our Perth office on +618 9321 4000 or our Melbourne office on +613 9111 9400.