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Revised regulatory guidance on related party transaction and expert reports

by Hilary Kincaid 30. March 2011 14:16

RG 76 Related party transactions has been updated. The aim of the guidance is to improve disclosure by public companies and registered managed investment schemes regarding related party transactions. More information is available on the ASIC site.


RG 111 Content of expert reports and RG 112 Independence of experts have also been revised. The object of the revision, which follows public consultation, is to ensure reliability and quality of reports commissioned to assist security holders in making major decision on schemes of arrangement, takeover bids and related party transactions.


Additional guidance is provided on how experts should assess whether a proposal is fair and reasonable, and how experts should explain any material difference between their assessed value of a security and its recent market price.

There is clarification about the use of the discounted cash flow methodology, particularly when valuing a start up project where there is a long lead time until cash is generated. The expert must have a reasonable basis for the forward looking information and be explicit in disclosing the extent and nature of the adjustments made to allow for development stage risks.


ASIC | Compliance

Anti-competitive conduct – ACCC authorisations and notifications procedure

by Hilary Kincaid 6. January 2011 10:06

In some circumstances, the Australian Competition and Consumer Commission may grant immunity from legal action for anti-competitive conduct. Immunity may be granted under the authorisation and notification provisions of the Act where “the public benefit from the anti-competitive conduct outweighs any public detriment”.

Conduct cannot be authorised retrospectively.

The ACCC has released a summary for businesses and legal practitioners regarding how to apply for an “authorisation” or a “notification”. A complete copy is available in pdf on the ACCC site.

The summary sets out:

  • Who can apply
  • How to apply for an authorisation
    • Conduct to which an authorisation may relate (eg conduct which would otherwise constitute resale price maintenance, a secondary boycott, or a cartel provision)
    • Relevant fees and procedure for application
  • How to lodge a notification
    • Conduct which may come within the scope of a notification (third line forcing conduct, other exclusive dealing conduct, collective bargaining)
    • Relevant fees and procedure for lodgement
  • Application for review.

The process is set out in further detail in the ACCC publications Guide to authorisation, Guide to exclusive dealing notifications and Guide to collective bargaining notifications.  


Compliance | Disclosure | Takeovers and Reconstructions | ACCC

ACCC updates Formal Merger Review Process Guidelines

by Hilary Kincaid 6. January 2011 09:56

The Australian Competition and Consumer Commission has released a revised version of the Formal Merger Review Process Guidelines.

The revisions update references to the Trade Practices Act 1974 to refer to the Competition and Consumer Act 2010.

The updated version of the Guidelines is available from the ACCC official site.


Compliance | Takeovers and Reconstructions

Guidance on obtaining ministerial consent to rely on extraterritorial conduct in private proceedings

by Hilary Kincaid 6. January 2011 09:48

Just before Christmas, Treasury released guidance in order to assist litigants and legal practitioners in relation to obtaining the consent of the Minister to rely on extraterritorial conduct in private proceedings commenced under s 12AC of the Australian Securities and Investments Commission Act 2001 and s 5 of the Competition and Consumer Act 2010 (the new name for the Trade Practices Act 1974 as of 1 January 2011).

The requirement of consent applies where:

  • A person seeking damages for breach of the CCA or the ASIC Act seeks to rely on evidence of foreign conduct;
  • A person seeks some other form of compensatory order – such as rescission of an agreement or transfer of property – in relation to such a breach and seeks to rely on evidence of foreign conduct.

In both cases, ministerial consent is required before making an application to the court.

The purpose of the provision, according to Treasury guidance, is to ensure that international relations are not disrupted by proceedings in Australian courts. This is principally because although the conduct complained of may be in breach of relevant Australian legislation, it may not be in breach of the laws of the foreign jurisdiction (and may in fact be expressly authorised by those laws).

The Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, is the Minister ordinarily responsible for giving consent under s 12AC of the ASIC Act, and the Minister to whom a request should be directed in the first instance.

The request should:

·         be in the form of a letter;

·         be accompanied by a copy of the pleadings, with the letter identifying by reference to relevant paragraphs in the pleadings the conduct which was engaged in outside Australia (and upon which the applicant wishes to rely);

·         state the section or sections under which consent is requested;

·         be forwarded to other parties in the proceedings and also to Treasury; and

·         include confirmation that the forwarding has occurred.

The complete guidance (which also sets out procedure for the provision of advice to the Minister on issues of foreign law) is available to download from the Treasury site. The guidance is current as at 1 January 2011.

Subscribers are referred to the annotations to s 12AC in Austin and Black’s Annotations to the Corporations Act at [ASICA.12AC] for more information.


Austin and Black's Annotations to the Corporations Act | Compliance | Litigation

Supporting regulations made for Corporations Amendment (No 1) Act 2010

by Hilary Kincaid 14. December 2010 11:07

Now that the substantive provisions of the Corporations Amendment (No 1) Act 2010 have commenced, amending regulations have been made in support of the new regime.

The Corporations Amendment Regulations 2010 (No 10) make amendments to prescribe improper purposes for the use of information in a copy of the register, and create a new fee structure for obtaining such copies.  The explanatory statement is available on Comlaw.


The Australian Securities and Investments Commission Amendment Regulations 2010 (No 5) substitute the definition of “financial service” in reg 2C. Their object is to ensure that ASIC can take action against parties under the investor protection provisions. The explanatory statement is available on Comlaw.


ASIC | Compliance | Legislation

Appointments to the Companies Auditors and Liquidators Disciplinary Board

by Hilary Kincaid 1. December 2010 11:31

David Bradbury, the Parliamentary Secretary to the Treasurer, has announced new appointments to the Companies Auditors and Liquidators Disciplinary Board. 

The most significant of these is the appointment of Howard Insall SC as Chairperson, replacing Donald Magarey. Mr Magarey has retired after 11 years in the role.  

Along with the appointment of Mr Insall SC, there were five reappointments and the appointment of a new accounting member.

The new accounting member is Mr George Georges.

Following amendments to the Australian Securities and Investments Commission Act 2001 earlier this year which widened the nomination process, Mr Georges is the first nominee of the National Institute of Accountants (NIA) to serve on CALDB.

All of the appointments are part‑time and are for a period of three years from 1 December 2010.




Financial Services Newsletter Vol 9 No 5 now available

by Hilary Kincaid 16. November 2010 13:55

The latest issue of our Financial Services Newsletter is now online.

We note the following feature articles:

  • "The common ethical risks associated with financial advice: removing the roadblocks to quality financial advice" by June Smith, Argyle Partners;
  • "ASIC proposes increased financial requirements for responsible entities" by Fadi C Khoury and Emmelyn Teo, Norton Rose Australia;
  • "Recent developments in relation to taxes" by Mark Radford, Colin Biggers and Paisley; and
  • "‘The definition of life insurance business and APRA's administration’ of s 12A of the Life Insurance Act 1995" by Michael Vrisakis, Freehills.


Compliance | Newsletters | Financial Services Newsletter

ASIC releases Class Order 10/907

by Hilary Kincaid 5. October 2010 10:17

The class order declares that the start date for fund raising special purpose vehicles and securitisation entities to become members of an ASIC-approved External Dispute Resolution scheme, in order to take advantage of the exemption from having to hold a credit licence is 1 January 2011.

The class order commenced on its date of registration, 1 October 2010. 


ASIC | Australian Consumer Credit Law | Compliance

Federal Court issues new practice note

by Hilary Kincaid 29. September 2010 10:31

The Federal Court has issued a new practice note, CORP 3 - Schemes of Arrangement.

The practice note, which is concise, states that when making an order under s 411(1) of the Corporations Act the court requires that the explanatory statement prominently displays a notice. The notice is to the effect that an order for convening a meeting does not indicate that the court has formed any view as to the merits of the scheme, and approval of the explanatory statement does not indicate that the court has prepared or is responsible for that statement's content.

For detailed practical guidance regarding schemes of arrangement in a takeovers context, subscribers are referred to Chapter 16 of Takeovers and Reconstructions.



Compliance | Litigation | Takeovers and Reconstructions

ASIC begins consumer credit surveillance

by Hilary Kincaid 24. September 2010 15:17

ASIC has begun its first nationwide surveillance activity to detect people and businesses engaging in credit activities without registration. Engaging in credit activities without registration has been an offence since 1 July 2010.

ASIC will be in the field from now until the end of the year.  Although the legislation allows for ASIC to prosecute or seek a civil remedy from the courts for non-compliance, the primary focus of the surveillance activity is to promote and drive compliance with the new consumer credit regime.

The maximum criminal penalties for operating without registration or a licence are $22,000 for individuals and $110,000 for corporations, or two years imprisonment, or both; or civil penalties of up to $220,000 for individuals and $1.1 million for corporations, partnerships or multiple trustees.

More information is available on the official ASIC site.

For up-to-date commentary regarding the sweeping changes to the consumer credit regime, subscribers are referred to Australian Consumer Credit Law.


ASIC | Australian Consumer Credit Law | Compliance


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