ASIC pledges to take on big financial players

— 1 minute read

ASIC has indicated it will be tackling corporate governance in a number of large financial services companies with a specially made taskforce in its new report on corporate finance regulation.

The report, ASIC Regulation of Corporate Finance: July to December 2018, covers ASIC’s regulation of fundraising transactions, mergers and acquisitions, experts and corporate governance issues.

The watchdog has formed a taskforce of 20 staff to conduct reviews of corporate governance in large listed entities, looking to review two specific issues: board and officer decisions around variable remuneration to key management, and oversight of non-financial risk.


“We have selected a number of large financial services entities that are subject to both workstreams of review,” ASIC said.

The regulator has also engaged an organisational psychologist to undertake behavioural analysis of the firms, which it said is “aligned with the work of foreign regulators that have recognised the important role that behaviour and culture play in matters such as board effectiveness.”

The unit has been backed by funding the body received in August, specifically to review corporate governance in large entities.

In fundraising, the June to December period saw a significant decrease in the largest orders according to the regulator, with total amounts raised in the top ten fundraisings decreasing from $9.4 billion in the previous period to $5 billion in the second half of 2018.

The top five disclosure concerns in fundraising for the period remained largely consistent with the previous period, ASIC said, as business model topped the list with 18 claims being made.

Misleading or deceptive disclosure followed as the second top concern, tailed by use of funds – misleading or insufficient detail.

Among the top ten fundraisings by amount raised, the Commonwealth Bank sought $750 million, ending up with $1.5 billion while similarly, Westpac had sought $750 million, but raised $1.4 billion.

Hearts and Minds Investments had managed to raise the amount it had sought of $500 million.

Perpetual Equity Investment had raised slightly more than the amount it sought, bringing in $101.2 million.

Initial coin offerings (ICO), an equivalent to initial public offering (IPO) using cryptocurrencies, with ASIC saying they are used for public capital raising and investments, based on a 12-month review.

The body is working on updating its guidelines around crypto-currency to provide direction on when an ICO may involve the issue of a financial product and on relevant disclosure requirements.

Climate risk, ASIC also noted, was highlighted as an important issue for investors during the 2018 annual general meeting season.

However, only 17 per cent of companies surveyed by ASIC in an earlier report, identified climate risk as a material risk in their operating and financial reviews (OFRs).

The majority of ASX 100 companies in its sample had to some extent, considered climate risk to the company’s business, while there is limited disclosure outside of the top 200, the watchdog said.

“General (as opposed to specific) risk disclosure is common, but it is not useful for assessing climate risk exposures, with fragmented climate risk disclosure practices making comparisons difficult,” the report noted.


ASIC pledges to take on big financial players
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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