Publication
‘Quis custodiet ipsos custodes’ - or FRAA for short?
The famous dictum "Who will guard the guards themselves?" might well apply to the new oversight agency, the Australian Financial Regulator Assessment Authority (FRAA).
Author:
Australia | Publication | August 2021
Late last year we looked at the then-temporary changes to Australia’s continuous disclosure regime made in response to the COVID pandemic.
Legislation making those changes permanent commenced on 14 August 2021.1
The crux of the reform makes companies and their officers liable for civil penalty proceedings in respect of continuous disclosure obligations where they have acted with ‘knowledge, recklessness or negligence’. The stated intention behind the change is to lessen the risk of opportunistic class actions against companies and their officers under continuous disclosure laws and, in doing so, to support companies and their officers in releasing forward-looking guidance to the market.
The pre-existing criminal offences for failing to comply with the continuous disclosure obligations set out in the current s674(2) of the Corporations Act remain in force. ASIC also continues to be able to issue an infringement notice for continuous disclosure non-compliance regardless of the state of mind of the entity. The Government has committed to an independent review of the new provisions after two years2, so ensuring that there is a legislated process for considering the effect of the reforms, along with any further changes that may be required.
The Parliamentary Joint Committee on Corporations and Financial Services reported into litigation funding and the regulation of the class action industry at the end of last year and recommended the permanent change. The Committee’s view was that this change would address an imbalance between the benefits to the market of continuous disclosure obligations and the costs imposed on entities and officers. This would also bring Australia’s continuous disclosure regime closer to the regimes in comparable jurisdictions such as the United States and United Kingdom.
The introduction of a mental element will mean that it is more difficult to prove claims of a breach of the continuous disclosure obligations. However, it remains to be seen whether or not in practice this reduces the number of class actions threatened or issued.
As we foreshadowed last year, the market will be monitoring how ASIC will accommodate the change to the continuous disclosure rules as part of its ongoing enforcement strategy. In addition, ASIC Chair, Joe Longo, being in the first few months of his tenure, is considering ASIC’s strategy and approach (see our recent post on ASIC the enforcement agency – a new direction?). We can expect that this will include his vision for ASIC’s enforcement activities.
On point, in an early public statement when asked about ASIC’s enforcement stance and whether there was ‘pressure to be more business friendly’, Mr Longo replied firmly in the negative and made a strong commitment ‘to ASIC remaining an active, credible law enforcement agency.’ Mr Longo’s experience in the 1990s as ASIC’s Head of Enforcement would appear to underline this commitment.
The market will await with interest any further expressions of ASIC’s enforcement attitudes and the approaches of plaintiffs and litigation funders to the new knowledge requirement.
Publication
International financial markets have started to show significant interest in nature and biodiversity. Whilst climate change and greenhouse gas emissions have made the headlines in recent years, there has been much less focus on their equally important counterparts, nature and biodiversity. However, that has started to change.
Publication
The European Court of Human Rights (ECtHR or the Court) recently ruled in Verein KlimaSeniorinnen Schweiz & Ors v. Switzerland (Application No. 53600/20) that Switzerland had breached the European Convention of Human Rights (the Convention) by not taking sufficient action against climate change. In particular, it found a breach of the right to respect for private and family life contained in Article 8 of the Convention, based on Switzerland’s failure to mitigate the impact of climate change on the lives, health, well-being and quality of life of its citizens. It also ruled that Switzerland had breached the right to a fair trial in terms of Article 6, in that the domestic courts failed to examine the merits of the applicants’ complaints, including the scientific evidence. In this article we consider the key features of this landmark judgment, which has wide ramifications for Member States of the Convention.
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