Navigating Lockdown 2.0
The challenging times continue, particularly for us in Victoria.
As parts of the country start to re-open, we here in Melbourne have headed back into lockdown for at least six weeks. Though this isn’t what any of us have hoped for, we continue to make the best of it!
Andrew and Yee are both adjusting to having kids at home full time again (including schooling), and Roxie has spent the majority of time since March at her family’s farm at Cape Bridgewater (pictured above), a lovely place to have to spend lockdown.
Due to restrictions in Melbourne we continue to work remotely but as normal, and we hope to be able to see each other (and our new office!) in the not too distant future. Sending our thoughts to everyone during these unsettling times, particularly those of you who like us find yourselves back in lockdown.
Andrew, Roxie & Yee
Each newsletter we profile one of our clients doing amazing things.
In this edition, we’re proud to feature The Evolved Group.
The Evolved Group is changing how organisations engage with customers using new conversational AI technology. Rather than relying on traditional click and point online surveys to engage with people, Evolve has been using advanced AI driven chat bots. Using this technology Evolve can engage with thousands of people to understand their thoughts, feelings and motivations. This enables clients to get a better insight using advanced text analytics methods as well as building strong brand engagement. Elevate Legal began working with the team at Evolve, including founders Garreth Chandler and Shane Hall in 2018 and we look forward to continuing to provide legal and governance support as the business grows. www.theevolvedgroup.com
What else is keeping us busy
Here’s some other projects we’ve worked on with our clients over the last few months.
- Completing a trade sale of a local software business to a US buyer
- Helping several clients with capital raising – SAFE notes, loans and issues of ordinary and preference shares
- Helping founders set up new businesses, bring in co-founders, key staff, non-executive directors and advisors
- Selective share buybacks for clients.
- Software / SaaS contract terms
- Intellectual property licences, assignments and other transactions
- Preparing, reviewing and advising on lots of commercial contracts
If you’re looking for similar solutions please get in touch.
Director Identification Number Bill passed
In a prior newsletter we mentioned the Director Identification Number Bill – it’s now been passed into law. This Act amends the Corporations Act 2001 by introducing the requirement of a director identification number (DIN).
This change will mean:
- A new Commonwealth Business Registry will be established.
- Every director will need to register to receive a permanent and unique DIN – a director will keep this DIN even if they cease to be a director and a person’s DIN is not intended to be re-issued to a new individual in the future.
The new law comes into effect on 12 June 2022, unless an earlier date is announced.
We will provide clients with a more detailed note closer to this time explaining what directors need to do.
There will be a transition period where every person who is a director at the time this new requirement comes into operation will be given a period of time to register. During the first 12 months, a person who is appointed as a director will have 28 days to apply for a DIN, after the first 12 month transition period ends, all directors will have to apply for a DIN before being formally appointed to the role.
Non-compliance with this new regime may result in criminal or civil penalties, so it will be in the interests of all directors and companies to make sure they comply.
Major changes proposed to FIRB regime
In June 2020 the Australian Treasurer announced major reforms to Australia’s foreign investment rules. This is to ensure that the framework keeps up to date with new emerging national security risks and other global developments.
The proposed reforms and changes are set out in documents available on the Government’s website (link here).
The key points are:
- A new ‘national security test’ will require foreign investors to seek approval for any acquisitions of direct interests (10% or more which provides control) in a ‘sensitive national security business’ no matter the value of the proposed investment. Practically, this will enable the Treasurer to impose conditions or potentially block a foreign investment on the grounds of national security, irrespective of the investments’ value. Details on what will constitute a ‘sensitive national security business’ have not yet been announced, however it has been flagged they may include: business regulated under the Telecommunications Act 1997; businesses regulated under the Security of Critical Infrastructure Act 2018; businesses involved in manufacturing or supplying defence or national security related goods, services and technologies; businesses that own, store, collect or maintain sensitive data that relates to defence or national security.
- New ‘call in’ powers will enable the Treasurer to review any foreign investment that raised a national security risk before, during and importantly after the investment. This power is proposed to have a time-limit on it, to help provide investment certainty.
- New ‘last resort’ powers will enable the Treasurer to re-assess a previously approved foreign investment where national security risks emerge later. Under these powers the Treasurer can impose or vary conditions on the investment and in some, limited situations, order divestment of a foreign investment. This power can’t be used retrospectively and will only apply to foreign investments that are reviewed under the new regime.
- A re-classification of some entities that are currently classified as ‘foreign government investors’ (FGIs). Where an FGI has no foreign government influence or control, it will be treated as a privately controlled entity. Importantly this will include private equity funds and managed institutional investors who currently fall within the FGI provisions. This change will help to streamline investments by these types of investors in non-sensitive sectors.
- An increase in compliance measures which will include stronger penalties and enforcement powers. This will give the Treasurer and the Government standard monitoring and investigative powers, as well as the ability to give directions to investors to prevent or address a suspected breach of any conditions of the foreign investment laws.
It is expected that these changes will come into effect on 1 January 2021 (replacing the temporary measures introduced on 29 March 2020 in response to the Covid-19 pandemic).
Registry Direct – offer of Shares online
Online share register platform Registry Direct is now enabling companies to create an online application form to manage the process of raising capital from prospective investors. Once payment has been made by an investor, securities can be allotted, and investor details automatically added to the Company’s register without the need for any additional data entry or processing.
We use Registry Direct for many of our clients. If you are looking to move to an online share register, please contact us to discuss whether Registry Direct could be the answer.
Covid-19 Lockdown Diversions
With a lot more time spent at home during the Covid-19 lockdown, I’d expect my reading list to be bulging. Well, partly… but first, a confession about the books I tried to read but gave up on!
- In Search of Lost Time, by Marcel Proust. This multi volume monster has laid undisturbed on my bookshelf for maybe 20 years. It’s one of those ‘classics’ that those of us with intellectual pretensions like to display without ever reading: think Ulysses by James Joyce, The Fatal Shore, or any of the Shakespeare plays you weren’t forced to do at school. So I gave it a good crack for maybe 40 pages then gave up. Life is too short, even in lockdown.
- The Plague, by Albert Camus. Another classic, and very topical – it’s about a town in lockdown during a pandemic. Again, I tried but just couldn’t sustain the interest. Maybe I’ll revisit in the next lockdown (?!)
After these false starts, I needed the comfort of an old favourite – and I found it in Cloudstreet by Tim Winton. Re-reading this after at least 15 years was a joy. It’s a truly Australian warm hug of family craziness, loss and redemption.
And for something more extreme: The Sellout, by Paul Beatty. This very darkly funny satire, published in 2015, is topical and timely given the state of race relations in the US over the last few months. It’s about a black man in Los Angeles who reintroduces segregation and slavery…extremely funny, in a painful way.
Finally, something more instructional – The Art of the Good Life, by Rolf Dobelli. Subtitled ‘clear thinking for business and a better life’, this book has 52 short chapters on how to make better decisions.
Happy lockdown reading!