Corporate Finance Update - Issue 22

Issue 22, April 2025

Technical specialist replaced after ASIC raises concerns

We remind independent experts of their responsibility to ensure any technical specialist engaged is competent in the relevant field, and that a failure to do so may lead to ASIC action. We recently intervened in an acquisition under item 7 of s611 of the Corporations Act 2001 (Corporations Act) because we had concerns that the technical specialist engaged by the independent expert lacked the competence to value the relevant mining assets.

In this circumstance we were concerned that the technical specialist report included valuations that were inconsistent with industry standards and norms, and several conclusions were formulated with insufficient disclosure of the underlying assumptions. We were also concerned that the technical specialist lacked recent experience in valuing the mineral assets. For these reasons, we considered that the report was inconsistent with our guidance in Regulatory Guide 111: Content of expert reports (RG 111), Regulatory Guide 112: Independence of experts (RG 112) and the VALMIN Code 2015.

After we raised these concerns, the independent expert engaged a new technical specialist.

Independent experts play a gatekeeper role in corporate transactions and their reports are relied upon by investors to make financial decisions. It is the responsibility of independent experts to select competent specialists and critically review technical specialist reports to limit the risk that expert reports contain misleading analysis and opinions.

For more information about ASIC’s expectations regarding the use of specialists, please see RG 111 and RG 112.

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Notices of meeting to approve buy-backs

Where a shareholder may substantially increase its voting power as a result of a buy-back, the notice of meeting for approval of the buy-back should include appropriate disclosure about those potential control effects.

ASIC may decline to provide relief for a buy-back, apply for a declaration of unacceptable circumstances, or take other regulatory action if we consider that shareholders were not adequately informed of control effects at the time they were asked to approve the buy-back.

When reviewing a buy-back, ASIC considers:

• the effect on the control of the company
• whether there is an equal opportunity for shareholders to participate in the benefits, and
• whether the disclosure and other procedural aspects of the buy-back would have substantially satisfied the requirements for a takeover under Chapter 6.

ASIC will expect more disclosure in relation to a buy-back that has greater potential control effects, for example, an increase in a person’s voting power from 40% to 60% compared to an increase in a person’s voting power from 10% to 20%. In general, disclosure of the possible control scenarios, the identities of those obtaining control, and the intentions of those persons for the future of the company will be material information to shareholders.

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Disclosure requirements for offers of securities made using an offer information statement

Following issues with recent lodgements, issuers are reminded that an offer of securities made using an offer information statement (OIS) must comply with the content requirements in section 715 of the Corporations Act.

Failure to do so may result in ASIC exercising our stop order powers where the noncompliance cannot be remedied in the exposure period.

Prior to lodging the OIS with ASIC, issuers must ensure that the OIS:

• seeks to raise no more than $10 million in aggregate (which includes any previous fundraising under an OIS: see section 709 of the Corporations Act)
• is dated correctly (all references in the OIS to the date of the offer document and the date of its lodgement with ASIC must correspond with the date the OIS is lodged with ASIC: see section 716 of the Corporations Act)
• is signed in accordance with section 351 of the Corporations Act, and
• contains the prescribed information set out in section 715 of the Corporations Act, including an audited financial report for a twelve month period with a balance date within the last six months before securities are first offered under the OIS, as well as a copy of the most recent sustainability report (where the issuer is required to prepare a sustainability report under section 292A of the Corporations Act).

If the OIS relates to an offer of securities in connection with an employee share scheme, issuers need to lodge the document with ASIC by email to corporations.lodgements@asic.gov.au.

For more information, see ASIC’s guidance in RG 254 Offering securities under a disclosure document (RG 254) and How and when to lodge your sustainability report.

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The rise of deepfake attacks in corporate fraud

To protect investors and consumers in a digital world, ASIC expects organisations to implement multi-factor authentication, establish strong verification procedures for high-risk transactions, and raise employee awareness of any potential signs of compromise. These actions are a strong defence against scam activity.

With the rise of artificial intelligence (AI), deepfake technology has swiftly evolved into a formidable cybersecurity threat, especially in connection with corporate fraud. Two high-profile incidents underscore the pressing need to address the dangers posed by deepfakes and AI.

In March 2019, a UK energy company lost $243,000 to a deepfake audio attack. The CEO's voice was replicated to dupe the finance director into transferring funds to a fraudulent account. The director, believing the call to be genuine, unwittingly caused an irreversible financial loss.

A more severe incident unfolded in Hong Kong in 2024, where cybercriminals impersonated a CFO, using deepfake audio and hacked emails, to persuade a senior executive to transfer a $25 million. The attackers' use of deepfake audio, combined with hacked emails, lent an air of credibility to their request, timed to coincide with ongoing company operations.

Both scenarios demonstrate that deepfake attacks exploit human trust and bypass traditional verification and authentication methods.

For more information on better cyber resilience practices with practical examples, see Report 776 Spotlight on cyber: Findings and insights from the cyber pulse survey 2023 (REP 776). Alternatively, refer to the ‘Identity and access management’ and ‘Continuous monitoring’ sections in ASIC’s Cyber Pulse Survey Questionnaire to assess your cyber security capability.

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ASIC clarifies expectations around virtual meetings

ASIC has recently updated its FAQs: Virtual meetings for companies and registered schemes web page following the release of the Government’s response to a review into the operation of the virtual meetings provisions.

The updates reflect ASIC’s expectation that members should have equivalent opportunities to participate at meetings using virtual technology as occurs for in-person meetings, and provide guidance on:

• whether virtual meetings require a phone line option
• the use of webcasts (which only allow members to view the meeting), and
• how to notify ASIC when an entity’s constitution is amended.

Where our expectations are not met, ASIC has a range of regulatory tools available to respond to non-compliance with the member meeting requirements, including through guidance, surveillance and formal investigations.

For more information, see the news item.

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ASIC provides guidance on sustainability reporting requirements

ASIC has published the finalised Regulatory Guide 280 Sustainability Reporting (RG 280) following an extensive public consultation with stakeholders. Preparers of these reports are encouraged to familiarise themselves with this guidance to help them comply with the legislative requirements.

RG 280 provides guidance for entities that are required to prepare a sustainability report containing climate-related financial information under Chapter 2M of the Corporations Act. This may include companies, registered schemes, registrable superannuation entities, and retail corporate collective investment vehicles.

It includes guidance on the content required in the sustainability report, disclosing sustainability-related financial information outside the sustainability report (such as in disclosure documents and product disclosure statements), and ASIC’s administration of the sustainability reporting requirements (including our specific approach to considering relief and use of our new directions power).

ASIC has provided further information about our pragmatic and proportionate approach to supervision and enforcement of the sustainability reporting requirements as they are being phased in.

Relief has been provided to allow stapled entities to prepare a consolidated sustainability report for the stapled group. ASIC will consider any applications seeking other relief from the sustainability reporting and audit requirements. These may take some time to consider in the early days as they may raise complex or novel issues.

Additionally, information for entities within the value chain of reporting entities, including small businesses and farmers, has been provided.

For more information, see:

• RG 280
• the sustainability reporting page on the ASIC website
• Report 809 Response to submissions on CP 380 Sustainability reporting
• ASIC Corporations (Amendment) Instrument 2025/164.

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ASIC Portal updated for the Takeovers Fees Regulations

The ASIC Portal has been updated to facilitate the fees payable under the Corporations (Fees) Amendment (Takeovers) Regulations 2024 (Takeovers Fees Regulations), which amended the Corporations (Fees) Regulations 2001, for the following lodgements of the Corporations Act:

• orders approving a scheme of arrangement under ss411(10)
• a compulsory acquisition notice under s661B(1)(b), and
• a buy-out notice under s662B(1)(b).

When making these lodgements you will be prompted to enter the “threshold value” of the respective transaction. For lodgements under s411(10), you will also be asked to confirm whether the scheme is a control transaction within the meaning of regulation 4B of the Takeovers Fees Regulations.

Following lodgement ASIC will send an invoice based on the threshold value provided.

Additional information about the Takeovers Fees Regulations may also be found in ASIC’s Corporate Finance Update – Issue 20.

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ASIC remakes limited relief for employee incentive schemes

ASIC has remade limited relief to help entities that have continuing obligations under employee incentive schemes (legacy schemes) established pursuant to Superseded Class Order [SCO 14/1000] Employee incentive schemes: Listed bodies or Superseded Class Order [SCO 14/1001] Employee incentive schemes: Unlisted bodies (EIS class orders).  The ASIC Corporations (Employee Incentive Schemes—Ongoing Relief) Instrument 2025/169 commenced on 27 March 2025 and is in the same form attached to our consultation.

Most entities would now rely on Div 1A, Pt 7.12 of the Corporations Act (ESS provisions) to offer financial products to their employees in Australia and new offers cannot be made to employees under ASIC Instrument 2025/169. The new instrument operates to ensure securities issued pursuant to existing options or incentive rights can be freely on-sold. It also provides incidental licensing and other relief to facilitate the operation of legacy schemes.

Any application for individual relief should explain why the applicant cannot rely on the ESS provisions, even if the applicant currently has an individual instrument that was based on an EIS class order. If ASIC is prepared to grant relief in relation to the ESS provisions, we must do so by notifiable instrument: s1100ZK(8) of the Corporations Act. It may be difficult for us to grant relief on an urgent basis because notifiable instruments can take more time.

ASIC’s guidance in Regulatory Guide 49 Employee incentive schemes (RG 49) has been largely superseded by the Government’s policy in the ESS provisions, although it may be useful in explaining the continuing obligations that entities may have under the EIS class orders.

Despite the repeal of the EIS class orders on 27 March 2025 by ASIC Corporations (Repeal) Instrument 2025/170, entities need to comply with conditions in the EIS class orders for so long as they have obligations under their legacy schemes: s13 Legislation Act 2003.

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ASIC remakes relief for offers of Chess Depository Interests

Following consultation earlier this year, ASIC has remade relief to facilitate offers of CHESS Depository Interests (CDIs) and updated Regulatory Guide 253 Fundraising: Facilitating offers of CHESS Depository Interests (RG 253).

ASIC Corporations (Offers of CHESS Depository Interests) Instrument 2025/180 commenced on 26 March 2025 and provides relief for offers for the issue or sale of CDIS where:

• the underlying financial products are shares of a foreign company, beneficial interests in shares of a foreign company or options to acquire, by way of issue, shares of a foreign company (collectively, underlying securities), and
• the underlying securities are:
  • quoted on, or will be quoted on, ASX Limited (including under the ASX Quoted Assets rules), Cboe Australia Pty Ltd, Sydney Stock Exchange Limited and National Stock Exchange of Australia Limited, and
  • held by CHESS Depositary Nominees Pty Ltd as the depository nominee.

Similar to the predecessor (Superseded Class Order [SCO 14/827] Offers of CHESS Interests), ASIC Instrument 2025/180 provides relief so that:

• offers of CDIs over underlying foreign securities are regulated by Ch 6D of the Corporations Act
• for the avoidance of doubt, exempting a foreign company from the requirement to hold an Australian financial services (AFS) licence for 'arranging' for CDN or a holder or proposed holder of CDIs to deal in CDIs over its underlying foreign securities, and
• to ensure that Ch 6D otherwise operates effectively for offers of CDIs.

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