Sustainability
- Greater accessibility of ubiquitous artificial intelligence (AI) technologies has had drastic environmental impacts. The article linked below highlights the environmental footprint of AI models and emphasises the importance of adopting sustainable practices to mitigate this footprint.
Click here to read the article published in ‘Towards Science Data’, on how AI negatively effects the environment. - Singapore has taken a leap towards environmental accountability by proposing compulsory climate reporting in line with IFRS’ latest ISSB disclosure standards for public and large private companies. The article below discusses Singapore’s motive to achieve their “Singapore Green Plan 2030”:
Click here to read the article by ESG today on Singapore’s proposal for mandatory climate reporting. - IFRS’s International Sustainability Standards Board (ISSB) is set to take responsibility over corporate climate related disclosures from the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) by 2024. This takeover is expected to improve the consolidation of reporting standards on sustainability.
Click hereto read the article by ESG today on TCFD’s responsibilities being handed over to ISSB. - The Australian Commonwealth Treasury has released a second Consultation Paper with respect to introducing mandatory climate change disclosures in Australia. The Consultation Paper was released on June 27, immediately following the release of the final International Sustainability Standards Board (ISSB) disclosure standards. This Consultation is seeking views on proposed positions for the detailed implementation and sequencing of standardised, internationally-aligned requirements for disclosing climate-related financial risks and opportunities in Australia. Submissions closed 21 July 2023.
Click here for Consultation Paper. - An important proposal from the International Auditing and Assurance Standards Board (IAASB) regarding a sustainability assurance standard. External assurance plays a key role in enhancing trust and confidence in financial reporting. It can do the same for sustainability reporting. This proposed standard will apply to sustainability information reported across any ESG topic and prepared under multiple frameworks including that of the International Sustainability Standards Board (ISSB). It’s open for consultation now, until December 1st.
Click here for a link to the IAASB proposal. - EY has set up a Sustainability Disclosure Hub, which is designed to help businesses navigate the IFRS Sustainability Disclosure Standards and transition to the next era of reporting.
Click here to access the hub. - The Australian Sustainable Finance institute (AFSI) appoints Technical Expert Group to support the next phase of Taxonomy development.
Click here to access the official media release from AFSI.
Risk
- The Australian Treasury has engaged in an exercise called Token Mapping to provide greater clarity to stakeholders on how, and the extent to which, the current financial services regime applies to crypto products. As part of the exercise, the Treasury has proposed that the test for assessing whether crypto products are financial products should be the same as that which is used for traditional financial products. This involves determining whether the crypto product is a facility through which certain financial functions can be performed such as, making financial investment, managing financial risk, or making non-cash payments.
Click here to read the article from Hall & Wilcox discussing this in more detail. - In the article, King & Wood Mallesons offer guidance on how organisations can harness the benefits of ChatGPT while effectively addressing the risks associated with its use. KWM make a compelling case for case why companies need a ChatGPT use policy and an AI governance framework.
Click here to read the full article published by KWM. - ASIC has taken various enforcement actions this month. Relevantly, ASIC has cancelled the AFSL of a licensee for failure to prepare and lodge financial statements and auditor opinions, imposed additional conditions on a licensee following targeted surveillance that indicated the AFSL holder was not adequately monitoring and supervising representatives, and suspended the AFSL of a licensee for failure to maintain the financial position required by not having sufficient net assets to meet licence conditions. ASIC has commenced civil penalty proceedings in the Federal Court against a director of Dixon Advisory & Superannuation Services Pty Limited for alleged breaches of directors’ duties by involvement in decisions that were allegedly to the advantage of Dixon Advisory’s holding company plus failing to properly consider the interests of Dixon Advisory’s creditors.
- The Payments System Board of the Reserve Bank of Australia, which is responsible for controlling risk, promoting the efficiency of the payments system, and promotion of competition in the market for payments services, has had two new appointments. The Government has appointed Dr Michelle Deaker and Professor Ross Buckley, and reappointed Ms Gina Cass-Gottlieb, the current head of the ACCC, as part-time members to the Payments System Board. Each appointment is a five-year term.
Click here for the official media release from Treasury. - On July 13, 2023, US District Judge Analisa Torres of the US District Court for the Southern District of New York ruled that Ripple Labs’ token, XRP, was a security when sold to institutional investors and not a security when sold to retail investors using digital asset exchanges or when used for service providers. Although the SEC intends to appeal this decision, companies with ongoing commercial projects now have support for the position that not all digital assets are securities. To avoid the characterisation of a token as a security, a token issuer would still have to ensure that the sale does not satisfy elements of the Howey test. If the project is raising money in a manner similar to the “Institutional Sales,” securities laws limitations would likely apply, at least until there is legislative clarity.
Click here to read a good summary of the decision by Cooleys LLP.
Compliance
- The Australian Treasury review of the regulatory framework for managed investment schemes, as announced in the October 2022-23 Budget, has now opened for submissions. The review is set to examine whether the existing regulatory framework is fit-for-purpose, identify any gaps, and consider potential improvements to reduce financial risks for investors. The paper seeks feedback on various issues, including whether:
- the wholesale client thresholds remain appropriate,
- the governance and compliance frameworks promote the effective operation of schemes,
- the regulation of schemes with real property is appropriate, and
- the rights of investors are adequately protected.
The findings are expected to be provided to the Federal Government in early 2024. Submissions can be made here until 29 September 2023. - The Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) have published supporting documents for the implementation of the Financial Accountability Regime (FAR) for the financial services industry. The regime aims to improve the accountability and responsibility framework for APRA regulated entities in banking, insurance, and superannuation.
Click here to read the joint APRA-ASIC consultation key materials. - The Financial Stability Board (FSB) has released ten policy recommendations to regulate crypto-asset activities and global stable coins. The objective of these policies is to ensure consistent and effective governance over global stable coin activity.
Click here to read the full list of recommendations in this article from Hall & Wilcox. - In May 2023, the Committee on Foreign Investment in the United States (CFISU) published a FAQ that seeks to re-define the “completion date” of a transaction as the date on which any equity transfers to a foreign investor.
Why does this undermine fundraising efforts of critical technology companies? Most mandatory CFIUS filings are mandatory because the U.S. company receiving an investment is involved with “critical technology.” That filing must be made at least 30 days prior to the transaction completion date. On the prior understanding of completion date, keyed to the transfer of key rights, deferring those rights until after CFIUS clearance had been a common method to ensure that a U.S. start-up could obtain capital quickly while still complying with the mandatory filing timing rules, i.e., filing 30 days prior to deal completion. The mandatory CFIUS filing could be made after the injection of capital, with the investor’s rights deferred for however long the CFIUS process might last (often many months). This is no longer an option. Now, when a U.S. critical technology company seeks to raise capital by packaging together investments from many investors (which is common), many foreign investors will have to sit on the sidelines because the deal cannot be closed quickly with an obligatory CFIUS process standing in the way. That increases the cost of capital for many cash-starved businesses.
Click here to read the article from Wilson Sonsini discussing this in more detail. - On 13 July, the Australian Government published a discussion paper on potential reforms to make Australia more resilient to cyber security trends. The Government considers that the way to get there is to create stronger incentives for Australian businesses to invest in cyber security. Submissions on the discussion paper are being accepted until 27 August.
The paper considers:- Governance standards (mandatory or voluntary) for large businesses;
- Minimum protection technical security controls for personal information, with may take the form of an enforceable security code under the Privacy Act 1988 (Cth);
- Mandatory baseline security features for smart devices replacing the voluntary Code of Practice for securing IoT devices released in September 2020 (which the Government found did not have a sufficient uptake) and based on International Standards (such as ESTI standards), following the approach to similar reforms in the United Kingdom;
- Transparency requirements, such as voluntary star rating and mandatory expiry date labels as well as voluntary or mandatory vulnerabilities disclosure policies;
- Cyber security health checks for small businesses; and
- New and clearer remedies under consumer and privacy legislation.
Herbert Smith Freehills provide a good summary of potential key reforms.
TMC updates
TMC is delighted to have advised Glow Capital Partners on compliance matters in relation to first deal; the acquisition of a controlling stake in Melbourne-headquartered clothing supplier Cargo Crew.
The TMC crew held its semi-annual strategy day, reflecting on the growth and success of the past year and setting new goals for the business.
Ricky has commenced his CPA with gusto.
Darren Conlon, our co-founder, has moved to LA to set up TMC’s presence in the US market.
