Corporate Advisory Bulletin - June 2020

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In the media

Temporary continuous disclosure determination takes effect

The Corporations (Coronavirus Economic Response) Determination (No. 2) 2020 modifies the operation of the continuous disclosure provisions in the Corporations Act 2001 (Cth) (the Act) to facilitate the continuation of business in circumstances relating to COVID-19. The changes will be in place until 26 November 2020.

The determination temporarily relaxes the disclosure obligations under the Act, modifying the operation of the civil penalty provisions by replacing the existing objective test for determining whether information is material, and therefore needs to be disclosed, with a new temporary test.

For the full explanatory statement, click here.

 

ACCC launch the Consumer Data Right Register and Accreditation Platform (RAAP)

The ACCC have launched the RAAP and Consumer Data Right Participation Portal on 27 May 2020, which enables businesses to apply to become Accredited Data Recipients. The platform will give consumers the right to safely access their data held by businesses, providing consumers with more control over their data.

The RAAP functions to create a trusted data environment where encrypted data is only shared between approved participants, and provides a portal where businesses can apply to become accredited.

For the full media release, click here.

 

Government response to Treasury consultation on stamping fee exemption

On 27 January 2020 the Morrison Government announced that the Treasury would undertake a public consultation on the merits of the current stamping fee exemption in relation to listed investment companies and trusts (LICs).

Stamping fees are an upfront one-off commission paid to financial services licensees for their role in capital raisings associated with the initial public offerings of shares.

Following the conclusion of Treasury’s consultation, the Morrison Government will move to extend the ban on conflicted remuneration to LICs. These changes will take effect from 1 July 2020.

For the full media release, click here.

 

In Practice and Courts

SME Guarantee Scheme

Under the SME Guarantee Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs. The Scheme will support up to $40 billion of lending to SMEs, including sole traders and not-for-profits, and will enhance lenders’ willingness and ability to provide credit. This will support many otherwise viable SMEs to access vital additional funding to assist with the financial impact of COVID-19.

The Scheme will be available for new loans made by participating lenders until 30 September 2020.

A list of participating lenders can be found here.

 

Infringement Action and Cases

Gudgeon v Gudgeon [2020] FCA 680

The Federal Court has held that a removal of a company director was not valid as the notice of meeting was defective and no quorum was present at the meeting of the company’s members.

The applicant director, Maurice Gudgeon commenced proceedings against the respondents, Peter Gudgeon and P & M Gudgeon Pty Ltd, seeking relief in relation to his purported removal as director.

The Court held that the meeting of members was not validly constituted as only one member was present at the meeting, and as such, there was no quorum. The Court noted that the meeting should have been dissolved or adjourned to such day, time and place as the directors determine.

Further, the notice of meeting was held to be defective as the notice was so broad in its terms that Maurice could not fairly understand that the intended business of the meeting was to move a resolution for his removal as director. The notice failed to include information that would enable Maurice to decide for himself whether to attend the meeting.

For the full decision, click here.

 

Hammond and ASIC [2020] AATA 1325

The AATA have revised ASIC’s disqualification of Jason Hammond from managing companies from the maximum period of five years, to three years.

Mr Hammond was disqualified as a result of his involvement in three failed companies and phoenixing activities, by transferring the business of an indebted company to a new company, leaving the initial company with no assets to pay creditors while continuing what was essentially the same business using the new company.

The decision serves as a reminder to directors to prevent their companies from trading while possibly insolvent, to pay tax and ensure the proper financial records are kept, and to exercise their director’s duties with care and diligence.

For the full decision, click here.

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