ASIC releases and clarifies its corporate finance priorities for the coming quarter

David Wilkie, Riley Taylor
24 May 2023
Time to read: 4.5 minutes

Companies should consider their internal documentation to avoid regulatory action against greenwashing or poor cyber-risk policies and ensure their reporting frameworks are in line with best practice policies for whistleblower protection and financial accountability.

In March of this year, ASIC released Corporate Finance Update - Issue 12 outlining its strategic priorities in the areas of fundraising, M&A and corporate governance (including sustainable financing, cybersecurity and whistleblower programs), ASIC's position being further clarified at the Corporate Finance Liaison Meeting. This article sets out the key takeaways from the latest corporate finance update, with ASIC's primary enforcement priority for 2023 being on protecting consumers from financial harm.


ASIC's priority is to drive good cyber-risk practices to minimise consumer harm, particularly in the wake of recent high-profile data breaches (including Optus, and Medibank). ASIC's view is that good cyber-risk management should be an organisational priority and ensuring this is taken up by regulated entities is one of ASIC's strategic priorities for 2023.

Regarding data breaches themselves, ASIC has explained that market announcements and trading halts can be effective tools to counter the risk of subsequent consumer harm. Additionally, ASIC has stated companies should review their continuous disclosure policies to ensure compliance with their obligations in the event of a breach; engage with their ASX advisor during an evolving incident to determine the appropriateness of potential responses; and disclose relevant information to ASIC, even where not required to do so.

Finally, ASIC has reminded entities affected by the Market Integrity Rules (Securities Markets) 2017 and Market Integrity Rules (Futures Markets) 2017 that these instruments apply recent amendments regarding technological resilience expectations and ASIC notification obligations.

Sustainable finance

ASIC has identified sustainable finance as a strategic priority and, due to an increased risk of greenwashing misconduct by companies, positioned the prevention of greenwashing misconduct as an enforcement priority for 2023. In that regard, ASIC has stated it will be closely monitoring all sustainability statements in all prospectuses, product disclosure statements and market announcements. ASIC encourages companies to review its "Information Sheet 271: How to avoid greenwashing when offering or promoting sustainability-related products" and the upcoming report to ensure any such statements on sustainability are made on reasonable grounds.

ASIC has already launched Australia-first court proceedings against Mercer Superannuation (Australia) Limited for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options, which highlights ASIC's intentions in acting on this enforcement priority. ASIC has also issued 12 infringement notices in the past quarter over alleged greenwashing.

Regarding climate-related financial disclosure, ASIC has advised companies to consider their own governance structures to ensure the most effective internal reporting and disclosure frameworks for climate-related financial risks. In this regard, ASIC has suggested (but not mandated) companies report in line with the Task Force on Climate-related Financial Disclosures framework.

Whistleblower protections

At the recent corporate finance meeting, ASIC identified its review of whistleblower policies and disclosure handling practices as a corporate governance focus. ASIC stated that all companies should look to the good practices identified in its Report 758 "Good practices for handling whistleblower disclosures" and consider how these can be adapted to suit their operations. ASIC will continue to review such policies for handling disclosures and implement a full range of enforcement mechanisms where serious harms are identified.


ASIC has stated its primary enforcement priority for fundraising will be ensuring compliance with design and distribution obligations (DDO). DDO requires issuers to notify ASIC with relevant information where a "significant dealing" in an investment product occurs outside that product's target market determination (TMD). ASIC has recently initiated two civil penalty proceedings against companies for alleged DDO breaches, alongside issuing 26 interim stop orders. Where such stop orders are issued this can severely delay the marketing of an investment product, and any negotiated outcome is only possible if the offer has not already been made available to investors outside the TMD. ASIC will continue to monitor the poor use of the TMD template, particularly where it has not been adapted to match the risk profile of the investment product.


ASIC has raised concerns arising from a recent de-SPAC transaction, where the directors disagreed with the independent expert's opinion. The board's critique related to the basis for the expert's opinion and suggested that additional value relating to certain factors had not been properly assessed. ASIC's concerns were heightened because the board's views were based on competing "expert" opinion which did not according with the approach to the assessment of fairness and reasonable that is standard market practice in Australia as set out in Regulatory Guide 111: Content of expert reports. Neither of the competing 'expert's held an Australian financial services licence so their opinions and associated reports could not be provided to members. Accordingly, ASIC's view was the members did not have sufficient information to assess the basis of the board's contrary opinion and the reasons behind it. Where a board proposes to critique an expert's material assumptions or highlight apparent factual inconsistencies in the report, ASIC has stated that it will closely consider the disclosure, noting that the board must disclose a reasonable basis for its opinion and ensure that members are properly informed before voting.

Further, with regards to termination and liability clauses in scheme implementation deeds, following the NSW Supreme Court's decision in Pendal Group Ltd [2002] NSWSC 1575, ASIC has reminded prospective bidders and targets to exercise caution when drafting transaction documents with negotiated liability and termination clauses to ensure that they reflect the parties' intentions, and their effect is properly disclosed to target shareholders and the market at the outset.

Finally, ASIC also raised its concerns over the drafting of "material adverse condition" (MAC) clauses. In ASIC's view, such clauses often give rise to uncertainty due to having undefined or unclear thresholds. The most prominent example in the regulator's view is that such clauses fail to provide detail on when circumstances will amount to a MAC. ASIC's preference is for MAC clauses to use quantifiable standards so parties and members of the public can assess whether a MAC has occurred in fact. Due to its concerns in this space, ASIC has stated it will continue to closely monitor MAC clauses to ensure they are objective and do not give rise to uncertainty.

Key takeaway

ASIC's latest Corporate Finance Update has shown that its regulatory priority is preventing financial harm to consumers. Companies should consider their internal documentation to avoid regulatory action against greenwashing or poor cyber-risk policies and ensure their reporting frameworks are in line with best practice policies for whistleblower protection and financial accountability. Companies should also ensure they comply with their DDO have mechanisms in place to comply with the new ESS provisions. Finally, as a general rule, boards should avoid critiquing independent expert reports without a reasonable basis and ensure that any MAC clauses included in agreements for control transactions have clear, quantifiable standards.

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