Corporate Advisory Update - October 2018

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In the Media

Crust franchisee accused of underpaying staff $35,000

A Crust Gourmet Pizza Bar franchisee in Melbourne is currently in hot water over allegations it underpaid seven employees a total of $35,725.

To read more, see: http://www.franchisebusiness.com.au/news/crust-franchisee-accused-of-underpaying-staff-$35

Has ABC chairman overstepped his role asks Governance Institute

Governance Institute believes Michelle Guthrie’s controversial departure as managing director and the subsequent resignation of Justin Milne as ABC chairman highlights the importance of clearly defining and separating the responsibilities of board and management.

According to the ASX Corporate Governance Principles and Recommendations (3rd Edition), good governance requires an appropriate separation between the board, who have an oversight role and management, who are responsible for the implementation of strategic objectives and performance. These Principles are also relevant for public sector entities.

To read more, see: https://www.governanceinstitute.com.au/news-media/media-releases/2018/sep/has-abc-chairman-overstepped-his-role-asks-governance-institute/

In Practice and Courts

Treasury Laws Amendment (Mutual entities) Bill 2018 – Draft Legislation

The proposed legislation provides a definition of a mutual entity to recognise the sector in the Corporations Act and to determine which mutual entities will be able to raise capital through the issuance of mutual capital instruments, to be implemented in the second phase and will address the uncertainty in Part 5 Schedule 4 of the Corporations Act

Stakeholders are invited to lodge submissions via the Treasury website by 1 November 2018.

To find out more, or to make a submission go to: https://treasury.gov.au/consultation/c2018-t331031/

Modernising Business Registers and Director Identification Numbers – Draft Legislation

This legislation will progress Director Identification Numbers (DINs) by introducing a legal framework for the regime.

The DIN is a unique identifier and provides traceability of a director’s relationships across companies and over time to assist regulators and external administrators investigate a director’s involvement in what may be unlawful activity, including illegal phoenix activity which has been a perennial problem for successive governments.

Stakeholders are invited to lodge submissions via the Treasury website by 26 October 2018.

To find out more, or to make a submission go to: https://www.treasury.gov.au/consultation/mbr/

Cases

Turner v MyBudget Pty Limited [2018] FCA 1407

The applicant in the matter, Mr Turner, entered into a service agreement with the respondent, MyBudget to open an account. MyBudget managed these accounts for people who struggled to independently maintain their financial affairs.  MyBudget also took on the burden of paying for bank and administration fees.

In his application, one of the terms Turner disputed related to interest on funds managed in accounts by MyBudget. The interest provision stated that the interest earned on client funds in a MyBudget account would not be given to the client. Rather, MyBudget would retain the interest to pay bank fees.  Turner claimed this was an unfair contract term.

It was held that Mr Turner was not entitled to receive the interest from his MyBudget account and was refused relief. The Court dismissed his application on the basis that:

  • any interest received and held by MyBudget pursuant to the services agreement entered into with members was not to be held in trust for those members; and
  • the interest provision inserted into MyBudget’s service agreements was not an unfair term for the purposes of section 23 of the ACL.

The full judgment can be accessed at: https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2018/1407.html

For further information, please do not hesitate to contact us.

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M&A/Corporate Advisory

Corporate Advisory Update - June 2017