Keeping good governance on government agendas
The Australian Institute of Company Directors (AICD) continues its advocacy efforts across various levels of government – from local government to the Commonwealth. Since the 2016 election, we have engaged in policy discussion with more than 25 key federal political offices, across parties and the Senate crossbench. Some of our more recent discussions are outlined here. Should you wish to engage with the AICD on a particular topic, we encourage you to contact our advocacy manager Amber O’Connell at email@example.com.
Crowd sourced equity funding
The Commonwealth Government’s innovation agenda is advancing, with plans to permit crowd-sourced equity funding (CSEF) for some companies. Legislation introduced and partially progressed by the government (at time of publication) amends the Corporations Act 2001 by establishing a framework to facilitate CSEF offers by small, unlisted public companies. This includes providing newly established eligible public companies with some temporary relief from certain reporting and corporate governance requirements (such as holding an AGM, providing annual reports to investors and having an audit). Key provisions of the framework include:
- CSEF of up to $5 million per year.
- Turnover and assets of companies to be less than $25 million.
- Investor limit of $10,000 per issuer per 12-month period for retail investors.
- Lower disclosures to access capital than currently required for public companies.
- The need for an intermediary that holds an Australian Financial Services Licence.
The AICD responded to a parliamentary inquiry on CSEF, supporting the prompt passage of the legislation while recognising that it didn’t provide a comprehensive framework for all small companies to use CSEF – private companies cannot access the regime. On balance, however, this legislation is a good starting point for innovative Australian businesses to access CSEF and for the development of the CSEF market domestically.
QLD environmental law
In late April 2016, the Environmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld) gave the Queensland Department of Environment and Heritage Protection (DEHP) greater powers to protect Queensland sites, particularly those operated by companies in financial difficulty. The DEHP can issue an environmental protection order (EPO) to a company’s “related persons” in certain circumstances. This includes persons in a position to influence the extent of the company’s environmental compliance or those capable of significantly benefiting financially from the activities of the company.
The “related person” test can be applied very broadly and may include directors, shareholders, insolvency practitioners and financiers. To guide the DEHP’s decisions on the application of this and the issuance of EPOs, a statutory guideline has been developed to sit underneath the Act – effective 27 January 2017. The AICD, together with other stakeholders, provided input into the development of the guidelines, and we will continue to ask that these measures be enshrined in the legislation.
Protection for whistleblowers
The AICD has called for significantly stronger and broader whistleblower protections under the law to improve good governance in corporate Australia and protect those who expose wrongdoing. In submissions to both a Treasury consultation and a parliamentary inquiry into whistleblowing reforms, we argued that there is significant scope to improve Australia’s corporate whistleblowing framework. We believe the current regime places a significant burden on the whistleblower and fails to encourage best practice governance frameworks and a culture of disclosure.
In our submission we recommend a range of improvements to the current whistleblowing regime including expanding the number and type of people protected under the Act, broadening the definition of “disclosable conduct”, extending protections to anonymous whistleblowers, and increased penalties for corporations that victimise or harm whistleblowers. We also support the removal of the requirement that a disclosure be made in “good faith” and suggest this be replaced with a more objective test that doesn’t focus on motive.
For the more controversial aspects of the discussion: financial incentives for whistleblowers and third-party disclosures (e.g. to the media) in extraordinary circumstances, we have suggested further consideration is needed once a draft framework is developed.