Legal updates

The Federal Government will soon release draft legislation that, if passed into law, will reform Part 5.8A of the Corporations Act 2001 (Cth) (the Act). The reforms are part of a wider policy to curb the misuse by corporates of the Fair Entitlements Guarantee (FEG) which often leads to the cost of employee entitlements being shifted to the taxpayer.

The obligations of employers in relation to employee records have become more important under the recent changes to the Fair Work Act 2009 (Cth) (Act) as a result of the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, which came into effect on 15 September 2017.

In the recent Federal Course case of Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953, Justice Derrington provided an in-depth analysis of the principles relating to an insolvent trustee’s right of indemnity over trust assets. The pervasive use of trading trusts in Australian commerce means that this question continues to feature prominently in matters of greatest concern to insolvency practitioners in everyday practice.

After the decision in Money Max late last year, it was not at all clear whether it would be a condition of common fund orders that the class members should be “no worse off” than they would have been under a funding equalisation order.  This created quite some confusion amongst litigation funders and lawyers and operated as a “brake” on the rush to file and seek common fund orders (which allow funders to take their commission from all class members even if they do not sign up with the funder).

One of the most important mechanisms in a contract for allocating risk is the ability to exclude “indirect” and “consequential” loss using exclusion clauses.  It is typically on a party’s list of most important clauses that may require approvals at board level if certain requirements are not met. Notwithstanding this importance, parties are not always clear on what kind of losses the terms “indirect” and “consequential” loss capture?

The amendments to the Corporations Act to broaden the ‘safe harbours’ for directors on an insolvency were passed by Parliament on 12 September 2017 and are awaiting a date for commencement.

On 12 September 2017, some of the most significant reforms of Australia’s corporate insolvency laws in recent years were passed by both Houses of the Australian Federal Parliament. These reforms will introduce a safe harbour for company directors from personal liability for insolvent trading and a stay on the enforcement of ipso facto clauses in certain circumstances. This article provides a brief overview of the reform relating to ipso facto clauses set out in the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (Cth) (Bill), which will become the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Cth) (new Act) when Royal Assent is received. 

In 2016, the Australian Federal Government, following the Foreign Investment Review Board (FIRB) approval process, rejected the bids for proposed partial sale of the New South Wales state owned electricity network company, Ausgrid, from each of China’s State Grid and Hong Kong’s Cheung Kong Infrastructureon the grounds of national security. The rejection occurred at the eleventh-hour and was said to have surprised the vendor (the New South Wales government) who claimed that it had received no warning from the Federal Government.

The Fair Work Amendment (Protecting Vulnerable Workers) Act 2017 (Vulnerable Workers Act) came into effect on 15 September 2017. The Vulnerable Workers Act amends the Fair Work Act 2009 to increase the penalties available for breaches of workplace laws and to strengthen the powers of the Fair Work Ombudsman.

September 2017

Still holding on

The recent appeal judgment in Mighty River International Ltd v Hughes [2017] WASCA 152 has confirmed the validity of ‘holding’ deeds of company arrangement, or ‘Holding DOCAs’ under the Corporations Act 2001 (Cth) (the Act).

On 14 September 2017, the Broadcasting Legislation Amendment (Broadcasting Reform) Bill 2017 (Cth) (Bill) was passed by the Senate, with amendments moved by Senator Nick Xenophon. The Bill includes a number of substantive amendments to the Broadcasting Services Act 1992 (Cth) (BSA) and is a part of the Australian Federal government’s comprehensive broadcast and content reform package announced on 6 May 2017. 

With shifts in international politics and sentiment, it is timely to revisit the current status of the Trans-Pacific Partnership Agreement (TPP) and the China-Australia Free Trade Agreement (ChAFTA), and their potential impact on investment to and from Australia.