YOUR KEY BOARDROOM BRIEF
Federal Government announces review into corporate criminal liability regime. Last week, the Federal Government confirmed the establishment of the Australian Law Reform Commission (AFRC) as part of its ongoing efforts to increase corporate accountability of directors and senior executives. The AFRC’s review will focus on whether Australia’s white-collar crime laws attribute sufficient liability for corporate criminal misconduct (including whether reforms to the Criminal Code are necessary or desirable). Directors should brace themselves for even tougher criminal sanctions to come, with more prosecutions and easier thresholds for ASIC to establish corporate or individual liability. The ALRC must provide its report to the Attorney-General by 30 April 2020. See also G+T article “Directors and executives under the microscope: ALRC review announced into Australia’s corporate criminal liability regime”.
ASIC publishes its enforcement update for the second half of 2018. ASIC’s Enforcement Update provides a high-level overview of its enforcement priorities and key decisions across corporate governance, financial services, market integrity and small business compliance during the period 1 July to 31 December 2018. Of note to Directors, the Update reports that $1.2 million in civil penalties was imposed by the courts during this period with a further $3 million recorded for compensation and remediation for investors and consumers and $0.5 million for ASIC infringement penalty payments. Unsurprisingly, ASIC’s Update and related media release emphasise ASIC’s ability to now pursue harsher civil penalties and criminal sanctions against those who have breached corporate and financial services law and ASIC’s continued focus on “holding gatekeepers to account”.
FRC releases report on audit enforcement. Australia’s Financial Reporting Council (FRC) has released a report which includes recommendations for improving ASIC’s audit enforcement processes. Among the recommendations are: (i) better tracking of enforcement matters across ASIC teams and a more structured approach to auditor surveillance; (ii) more detailed publication of the results of audit inspections including naming firms; and (iii) ASIC being given the power to compel remediation of defective audits and publish notices when this occurs. ASIC has welcomed the report – see ASIC’s media release for its responses.
THE WEEK AHEAD
Federal election confirmed for 18 May. Directors should note this announcement has triggered the implementation of Government caretaker protocols, which may slow the machinery of Federal Government somewhat.
New Brexit deadline of 31 October. The EU’s approved extension comes with the option of an earlier exit if the UK Parliament ratifies the withdrawal agreement. As ongoing cross-party talks are failing miserably at putting an end to the Brexit impasse - not to mention the EU has ruled out any renegotiation of the withdrawal agreement - the option of a public vote is probably still on the table. Meanwhile, ASIC confirmed last week it has entered into memoranda of understanding with the UK regulator in an attempt to give businesses reassurance that post-Brexit cooperation arrangements are in place. See ASIC’s media release and guidance on preparing for Brexit.