Corporate Advisory Bulletin – 19 November 2014

November, 2014

Directors’ confidence in Federal Government slumps

The latest Director Sentiment Index released by the Australian Institute of Company Directors (AICD) has shown that directors’ confidence in the Federal Coalition Government has slumped to its lowest level since its election in September 2013. Almost half of all directors rate the Government’s performance in its first year in office as poor or very poor.

The Index results are based on a survey of 501 directors of private businesses, Not for Profit organisations and ASX-listed companies conducted from 29 September to 12 October 2014.

According to the AICD, the Index is the only indication of the opinions and future intentions of directors. Results showed that most directors believe that the Coalition Government does not understand business and almost half of all directors believe the Government’s performance had a negative impact on their business decision-making and around 75 per cent believe it had a negative impact on consumer confidence.

Annual report highlights effective enforcement by ACCC

The ACCC’s annual report for 2013–14 shows the ACCC was involved in 53 proceedings relating to consumer protection enforcement and increased competition enforcement, and sent strong deterrence messages by securing over $12 million in penalties and other remedies during the year.

To read more, please click here.

ASIC update of employee incentive scheme policy and release of class orders

ASIC’s updated Regulatory Guide 49 Employee incentive schemes (RG 49) follows Consultation Paper 218 Employee incentive schemes (CP 218), issued in November 2013 (refer: 13-310MR).

ASIC has also replaced Class Order [CO 03/184] Employee share schemes with two new class orders to facilitate the offer of a range of financial products under employee incentive schemes. One class order relates to listed bodies and the other to unlisted bodies.

Competition Policy Review: Draft Report (Harper Review)

The draft report was released on 22 September 2014. The 313 report is broad-ranging and includes 52 recommendations, broken up as follows:

To read more, please click here.

Submissions relating to the draft report were due by 17 November 2014. Details available on the Review’s website. The Panel will hold a number of public forums.

Liu and Australian Securities and Investments Commission [2014] AATA 817

On 31 October 2014 the Administrative Appeals Tribunal of Australia affirmed an order imposed by ASIC permanently banning a financial advisor involved in the collapse of Trio Capital. ASIC had investigated the collapse of Trio Capital, formerly Austarra Capital Ltd, which was the responsible entity for two fraudulently managed investment schemes. ASIC permanently banned Liu, Chief Investment Strategist for Astarra Capital Limited, from providing financial services on 7 February 2013 for engaging in dishonest conduct in the course of carrying on a financial services business.

The Tribunal said: “this was one of the largest and most serious collapses of a managed investment scheme. Retail investors lost retirement savings and Mr Liu was involved in promoting and managing investments in ASF. General deterrence is an important consideration in this case. It is also important for the public to have confidence in the regulation of the financial services industry and for the regulator to send a message to other financial service providers about the significance of compliance with the financial services laws.

To read more, please click here.

In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547

This was an application for declaration that an agency relationship existed between the plaintiff and first defendant. The NSW Supreme Court was asked to consider whether plaintiff conferred any authority on first defendant to affect its relations with a third party. The Court was also asked to consider whether an express trust existed in circumstances where there was no separate account established by first defendant to retain relevant monies by third party for plaintiff and whether relevant monies received by first defendant from a third party was held on trust for plaintiff.

The Plaintiff, Gestion Pty Ltd (Gestion), provided professional consulting services. The First Defendant, Kit Digital Australia Pty Ltd (in liq), carried on a similar business, was previously known as Hyro Australia Pty Ltd and was acquired by an American software and technology company, Kit Digital Incorporated, in September 2012. It was placed in voluntary administration in December 2012 and, on resolution of its creditors that it be wound up, transitioned to liquidation in February 2013.

Gestion sought, by way of substantive relief, a declaration that Kit held $181,445 on trust for Gestion and an order that Kit pay that amount to it. In the alternative, against the contingency that Kit no longer held the funds on trust for Gestion, Gestion also sought a declaration that the liquidators of Kit were liable for breach of trust or alternatively were knowingly concerned with a breach of trust and an order that they were liable to Gestion for that amount.

The NSW Supreme Court did not accept the evidence that a relationship between the parties resulted in a trust, hence the applicant also failed to establish its claim against the second respondent. The application was dismissed.

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Contact Mills Oakley


Warren Scott | Partner
T: +61 3 9605 0984


Daniel Livingston | Partner 
T: +61 3 9605 0965


Stuart Gibson | Partner
T: +61 3 9605 0092


Warwick Painter | Partner
T: +61 2 8289 5808


Gavin Douglas | Partner
T: +61 2 8289 5855


Simon Champion | Partner
T: +61 2 8289 7926


Tim Cox | Partner
T: +61 2 3228 0442


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