Corporate Advisory Bulletin – August 2020

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In the media

ACCC issues infringement notices to Freedom Furniture for allegedly misleading consumers about rights to refunds

Steinhoff Asia Pacific Pty Ltd trading as Freedom Furniture has paid penalties totalling $25,200 after the ACCC issued it with two infringement notices for misrepresenting consumer guarantee rights to their customers.

The infringement notices were issued by the ACCC after Freedom Furniture published the following statement on their website in August and September 2019: “Furniture items cannot be returned or exchanged, except at Freedom’s absolute discretion.”

For the full media release, click here.

Government Response to the Fairness in Franchising Report

On 20 August 2020, the Government released it’s response to The Parliamentary Joint Committee’s Fairness in Franchising report (Report).

The Report revealed a range of problems in the franchising sector.

For the full publication, click here.

To view the Government’s Response, click here. 

To view Report, click here.

AICD welcomes extension for virtual AGMs and e-signatures

The Australian Institute of Company Directors (AICD) has earlier last month welcomed the Treasurer’s six-month extension of the temporary relief measure allowing for virtual AGMs and e-signatures.

An extension until 21 March 2021 was granted by Treasurer Josh Frydenberg allowing companies to convene AGMs and other meetings prescribed under the Corporations Act, entirely online rather than face-to-face and give businesses certainty that when company officers sign a document electronically, the document has been validly executed.

For the full media release, click here.

In Practice and Courts

ASX is extending temporary emergency capital raising relief to 30 November 2020

On 31 March 2020, the ASX announced temporary capital raising relief recognising that many listed entities will need to raise capital due to the effects of the COVID-19 health crisis. ASX has granted a temporary class waiver to lift the 15% limit on placements in listing rule 7.1 to 25%, upon entities meeting certain conditions.  ASX has also granted a temporary class waiver of the one-for-one cap on non-renounceable entitlement offers in listing rule 7.11.3, covering both ANREOs and standard non-renounceable rights issues.

The temporary relief for both class waivers originally applied until 31 July 2020. These waivers extend the relief to 30 November 2020, unless revoked earlier by ASX.

For the full Temporary Extra Placement Capacity Class Waiver, click here. 

For the full Non-renounceable Offers Class Waiver, click here.

Infringement Action and Cases

Australian Securities and Investments Commission v Mitchell (No 2) [2020] FCA 1098

Harold Mitchell, who was a director and Vice President of Tennis Australia (TA) from 2008 to 2015, was found by the Federal Court of Australia to have breached his director’s duties in connection with a 2013 decision by the TA Board to award the domestic television broadcast rights for the Australian Open tennis tournament to the Seven Network.

The Court held that Mr Mitchell contravened s180(1) of the Corporations Act on three occasions in December 2012 by failing not to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise.

ASIC also unsuccessfully alleged breaches of sections 182 and 183 of the Corporations Act by Mr Mitchell. It was ASIC’s case that Mr Mitchell deliberately sought to prefer Seven’s interests over TA’s interests. However, His Honour held that, although some of Mr Mitchell’s conduct could be criticised, he nevertheless acted in what he perceived to be TA’s interests and those allegations were dismissed by his Honour.

Stephen Healy, the former Chairman and President of TA who was also sued by ASIC, was found not to have breached his director’s duties.

For the full decision, click here.

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