Welcome to the August 2019 Elevate Legal newsletter.
We’re in the depths of a Melbourne winter and looking forward to Springtime (after the Tigers storm home to win the AFL Premiership!)
In the meantime please enjoy our news from the last few months.
Supporting Intelledox in their sale to Smart Communications
A major focus for the Elevate Legal team over the past few months (and why this newsletter is a bit later and thinner than previous ones!) has been supporting our client, Intelledox, in their acquisition by Smart Communications, announced in July 2019.
Intelledox is a Canberra based software company with global operations and customers, who use the Intelledox platform to transform their digital customer experience. Smart Communications is a UK-based provider of a leading cloud-based platform for enterprise customer communications.
We began working with Intelledox in early 2017, providing outsourced general counsel and company secretary services. We advised the company through several capital raising rounds, and were proud to lead the legal work on the sale process this year, with specialist support from Norton Rose Fulbright.
We’ve been honoured to be part of the Intelledox family during the last few years and look forward to continuing to support the combined business through their continued growth and success.
What else is keeping us busy
Here’s some other projects we’ve worked on with our clients over the last few months.
If you’re looking for similar solutions please get in touch.
- In April 2019 our client Envirostream secured an investment and strategic partnership with Lithium Australia (ASX: LIT). Lithium Australia will acquire an 18.9% stake in Envirostream through an investment of $600,000 in cash and Lithium Australia shares. Elevate Legal is proud to have advised Envirostream on the transaction.
- Helping clients get ready for investment, trade sale or IPO – using the Ansarada platform – see ipoready.com.au. We help founders and management teams get their companies in shape for a transaction or investment, earlier, faster and with less stress. We’re currently working with one client on a planned IPO and several others on potential investment transactions.
- Helping early stage companies scale up by bringing on new co-founders, with new shareholder agreements, funding agreements, employment and consulting contracts, and intellectual property assignments.
- (And, in an unfortunate fact of business life, we’ve recently helped a few clients navigate through a business separation and co-founder departure.)
- Capital raisings – preparing pitch materials and legal documents (term sheets, investor presentations, subscription agreements) – for investment rounds from new and existing investors.
- Share buybacks and cancellations for several clients.
- Managing our clients’ share registers – including staff equity – online at registrydirect.com.au – a subscription based service which replaces manual spreadsheets and paper share certificates.
- Drafting and reviewing lots of commercial contracts: consulting contracts, reseller and strategic partnerships, sales agency and distribution, software licences and SaaS contracts, product and service contracts…
Each newsletter we profile one of our clients doing amazing things.
In this edition, we’re proud to feature CSIRO’s ON Program.
CSIRO is Australia’s national science research agency. CSIRO ON is Australia’s largest and only national science accelerator, partnering with over 40 Australian leading institutes and foundations. Over the past three years, ON has helped +1,400 scientists, +300 teams, created +40 new companies which has attracted +$60 million in commercialization capital. Many ON Alumni have gone into international markets including Europe, the US, Asia, South America and South Africa. The impact ON companies have created is substantial solving global challenges ranging from Climate Change, Food Shortage, Better Health, Future Cities and Smart Manufacturing.
Elevate Legal began working with CSIRO ON in mid 2017, to help their teams set up new companies, get founders and shareholders agreements in place and commercialise their amazing technologies, including with commercial contracts, employee equity plans and capital raising.
CSIRO ON invites you to see it in action! On September 11 in Melbourne, there will be over 400 guests ranging from: VCs, start-ups, founders, CSIRO, scientists, governments, universities, corporates participating in their ON Tribe forum to celebrate the successful companies! Please register here:
For more information on CSIRO ON please visit http://www.oninnovation.com.au/ or contact Mark Luo, CSIRO’s New Venture Manager at firstname.lastname@example.org.
Foreign Influence Transparency Scheme
If you work for a foreign principal and have dealings with Australian governments, you should be familiar with the Foreign Influence Transparency Scheme.
The Australian Federal Government scheme started in December 2018 with the aim of providing ‘the public and government decision-makers with visibility of the nature, level and extent of foreign influence on Australia’s government and political process’.
Under the scheme, people or entities that undertake certain activities on behalf of a foreign principal for the purpose of political or governmental influence are required to register unless an exemption applies. Whether a person is required to register depends on who the foreign principal is, the nature of the activities undertaken (and their purpose), and in some cases, whether the person has held a senior public position in Australia.
A foreign principal includes:
- a foreign government
- a foreign political organisation
- a foreign government related entity
- a foreign government related individual.
It’s important to note that this extends beyond foreign governments themselves. A company will be considered a foreign government related entity if a foreign principle holds more than 15% of the company’s issued share capital. Once a company is considered principal a foreign government related entity, it will then also fall within the definition of foreign principal. So if that company holds more than 15% of the issued share capital of another company, the other company is also caught….and so on down the line.
Categories of registrable activities include:
- parliamentary lobbying on behalf of a foreign government
- parliamentary lobbying on behalf of other kinds of foreign principals for the purpose of political or governmental influence
- general political lobbying for the purpose of political or governmental influence
- communications activities for the purpose of political or government influence
- disbursement activities for the purpose of political or governmental influence
- activities undertaken by former Cabinet ministers on behalf of a foreign principal
- activities undertaken by recent designated position holders in the 15 year period immediately following their public role where those activities draw on the knowledge, skills or experience gained in their previous role.
It is the responsibility of the person undertaking the activities to determine whether they are required to register. It is a criminal offence not to register if you are required to do so, or to provide false or misleading information, and penalties apply.
Registrants need to provide a range of information to support their registration, and must keep this information up to date. Registrations must be renewed every 12 months if the registrant continues to undertake registrable activities for a foreign principal. If a registration is not renewed after 12 months, it will automatically expire.
Some of this information will be made public via the scheme’s website – available at https://transparency.ag.gov.au/
(You can see which ex-Cabinet Ministers are lobbying for principals from which countries…and download it all in a spreadsheet…)
More information is available at https://www.ag.gov.au/Integrity/foreign-influence-transparency-scheme/Pages/default.aspx
Notifiable Data Breaches Scheme First Annual Report
In May 2019 the Privacy Commissioner released a report on the first year’s operation of the Notifiable Data Breaches Scheme.
Key statistics from the report include:
- 964 eligible data breaches were notified to affected individuals and the OAIC from 1 April 2018 to 31 March 2019
- 60% of breaches were due to malicious or criminal attack
- This includes phishing (people tricked into revealing information such as passwords) causing 153 breaches
- 35% of all notifiable data breaches were directly due to human error
- This includes personal information being emailed to the wrong recipient, which caused 97 data breaches (10%)
- The remaining 5% of all breaches involved system faults
- Health service providers and financial services were the industry sectors with the highest number of data breach notifications.
The full report – including lessons learned and best practise tips – is available at https://www.oaic.gov.au/privacy/notifiable-data-breaches/notifiable-data-breaches-statistics/notifiable-data-breaches-scheme-12month-insights-report/.
Small Companies are now twice as large…
In our March 2019 newsletter we foreshadowed changes to the rules about what sorts of private companies must prepare and lodge annual financial reports. Those changes came into effect on 1 July 2019.
There are three tests, which apply to the company plus any entity it controls. A company will now be a large company – and required to lodge financial reports with ASIC – if it meets any two of these tests for a financial year:
After 1 July 2019
Consolidated gross assets
Number of employees
If general terms, if a private company doesn’t meet these tests, it doesn’t have to lodge financial reports with ASIC. (There are some exceptions, for example companies that hold an Australian Financial Services Licence.)
New Whistleblowing Laws now in operation
A reminder that new whistleblower protection laws also came into force on 1 July 2019. Public companies and proprietary companies that are trustees of a superannuation entity must have a whistleblower policy from 1 January 2020. We also mentioned this in our March edition.
Diversions we’re enjoying
Here’s a recent podcast we enjoyed with prominent venture capital investor Marc Andreessen revisiting his seminal 2011 essay on ‘Why Software is Eating the World’.
In the podcast he explains his thesis and how it’s panned out since then in various industries – and what’s next. It’s a good short introduction to how venture capital investors approach innovation, and software companies in particular.
First: “Any product or service in any field that can become a software product, will become a software product….If it can become bits, it will become bits.”
Second: “Every company in the world in any of the markets in which this is happening, therefore has to become a software company.”
Which means: “In the long run, in every market, the best software company will win.”
It’s Winter in Melbourne, which means – apart from kids’ footy all weekend, every weekend! – more TV and streaming than usual. Recent favourites include the just-finished season 3 of The Handmaid’s Tale on SBS On Demand. We won’t spoil the ending, but let’s say there were tears involved… And, on Netflix, we’re halfway through season one of Money Heist, a stylish Spanish crime drama. We just need to finish before Springtime arrives and it’s time to come out of hibernation!