Elevate turns 6

Spring has sprung and it’s our birthday! We are looking forward to being able to celebrate this milestone as a team (and in person!) given the last two have been spent in Covid lockdowns. It is good to see Melbourne coming to life again post winter with the sun even occasionally making an appearance.

We have continued to be busy throughout the quarter, and some of the team are looking forward to upcoming holidays – Yee is heading overseas (!!) to Singapore in November and Roxie is attempting to complete at 11 day, ~250km hike in Southwest Victoria in late October. Kathy and Ash have also recently enjoyed a break away from work.

As always, if there is anything we can do for you, please reach out.

Best Wishes

Andrew, Roxie, Yee, Ash & Kathy

Quarter Highlights


We would like to congratulate our Alliance client Castlepoint Systems, and in particular CEO Rachael Greaves, on its recent recognition in the cyber security and technology space including:

  • Being named a finalist for Cyber Security Startup of the Year for 2022 at the Australian Information Security Association (AISA) Awards.
  • Being named a finalist for the RegTech Awards 2022 – RegTech of the Year Australian founded, and RegTech Female Innovator of the Year (Rachael Greaves, CEO).
  • CEO Rachael Greaves being named a finalist in the 2022 Australian Women in Security Awards.

MGA Thermal

Congratulations also to our Alliance client MGA Thermal on being included in The Australian’s Top 100 Innovators List 2022 and named as a finalist for InnovationAus.com 2022 Awards for Excellence. We look forward to continuing to support Erich, Alex and the team in their valuable work.

Sustainable Australia Fund

Our Alliance client Sustainable Australia Fund announced a partnership with Credit Suisse to provide $100 million of innovative green loans for Australian businesses. We were pleased to assist SAF on an equity capital raise earlier this year.

SAFE fundings

During the quarter we helped several clients raise capital through SAFEs (Simple Agreement for Future Equity). SAFEs are a way of raising capital without having to negotiate or agree on company valuation – a bit like a convertible note, but less painful. They are proving popular in the current market, where valuations for early stage tech companies are in a state of flux.


We are also working on business acquisition and sale projects for several clients – more details to follow once the deals are public.

Alliance Update

We continue to grow our Alliance subscription service, to provide ‘business as usual’ legal support for a fixed monthly fee. If you are looking for a better model for commercial legal support, please contact us at alliance@elevate.legal.

Legal briefing


Changes to ESS Laws from 1 October 2022

The Australian Government has introduced new legislation which amends the way Australian companies can offer equity to their staff through Employee Share Schemes (ESS). The Treasury Laws Amendment (Cost of Living Support and Other Measures) Act 2022 amends the Corporations Act 2001 by inserting a new Division 1A into part 7.12 and came into effect on 1 October 2022. The changes relating to ESS offers replace and expand the current ASIC Class Order relief for both listed and unlisted companies (ASIC Class Orders 14/1001 and 14/1000), meaning the disclosure requirements under the Corporations Act 2001 will not apply to offers. These changes to not affect other exemptions to disclosure (e.g. offers to senior managers and the ‘20/12’ rule for small scale offerings).

The changes include some positive steps forward:

  • Raising the monetary cap from $5,000 (value of the ESS interest) to $30,000 (cost that is actually paid by the participant for the ESS interest) per year per person, with some ‘carry forward’ allowed.
  • Broadening who can receive an offer under an ESS.
  • Permitting ESS interests that do not require the recipient to pay anything (e.g. performance rights or zero exercise price options) to be made without any specific disclosure.

But also, some changes that we believe undermine the intent of encouraging ESS offers:

  • If the recipient has to pay anything (including for the most common form of ESS offer, market-priced options) then the new laws actually require more disclosure, on an ongoing basis (e.g. for any material changes over the life of the option).
  • A new penalties regime for non-compliance with disclosure and other requirements – including directors being personally liable, and new criminal offences.

There may also be tax issues to consider (including whether start-up tax concessions can be used) based on the introduction of this legislation.

If you currently rely on an ASIC Class Order to offer equity to staff, you will need to review your ESS plan rules and offer documents and update them to comply with the new legislation. If this applies to you, please feel free to reach out to us to discuss your options at info@elevate.legal.


Director ID Numbers – deadline of 30 November 2022

This is a reminder that the deadline for obtaining a Director Identification Number for those who were appointed on or before 31 October 2021 is fast approaching. All directors who were appointed on or before this date must have applied for their Director Identification Number by 30 November 2022. For further information on who needs a Director Identification Number and by when please visit https://www.abrs.gov.au/director-identification-number/who-needs-apply-and-when and to if you are ready to start the process, please visit https://www.mygovid.gov.au/set-up.


ATO Director Penalty Notices

Directors of Australian companies are responsible for ensuring the company’s tax and superannuation obligations are reported and paid on time. If a company does not pay certain liabilities to the ATO by the due date, the ATO can recover these amounts from directors personally, by issuing a director penalty notice (DPN). The ATO can recover amounts by:

  • issuing a garnishee notice;
  • offsetting any tax credits against the director penalties; and
  • initiating legal proceedings against directors to recover the director penalty.

If an individual director pays the DPN, they can reclaim the money from the company, or (if the company cannot pay) from the other directors equally.

For example, unpaid PAYGW or GST reported to the ATO within 3 months of the due date may result in the ATO issuing a traditional DPN (21 days to pay). If the unpaid amount is reported more than 3 months after the due date, the ATO may issue a lockdown DPN (immediate payment) which means the only way to remit the director penalty is to pay the debt in full.

It is important for company directors to be aware of these obligations and to keep on top of lodgements to the ATO and seek extensions where necessary.

For more information see https://www.ato.gov.au/Business/Engaging-a-worker/In-detail/Director-penalty-regime/.


Dick Smith directors personally liable for a dividend paid before the company went under

A recent NSW Court of Appeal case (DSHE Holdings (Receivers & Managers Appointed) (In Liquidation) v Potts; HSBC Bank Ltd v Abboud; Potts v National Australia Bank Ltd [2022] NSWCA 165) provides some guidance to company directors on the requirements they must satisfy before declaring a dividend.

In 2016 the Dick Smith electronics retailing business collapsed. Receivers of the company sued the former CEO and Managing Director (Mr Abboud) and CFO, Company Secretary and Director (Mr Potts). The receiver claimed that the directors breached their duty under section 180 of the Corporations Act 2001 (duty of care and diligence) by voting in favour of declaring two dividends – an interim dividend of $16.5 million in February 2015 and a final dividend of $11.8 million in August 2015 – because the company was suffering cash flow issues at the time which were intensified by paying these dividends.

A company must not pay a dividend unless (among other things) the payment of the dividend “does not materially prejudice the company’s ability to pay its creditors”. The Court in this case considered the meaning of this restriction and concluded that a company cannot pay a dividend if it will materially affect its ability to pay its creditors on time while “ability” was found to encompass the flexible ways directors and company officers can generate cash for a dividend.

At trial the cash flow forecasts presented at board meetings suggested Dick Smith (despite some financial difficulties) could afford to pay both dividends and the non-executive directors were entitled to rely on this and avoid liability. On appeal it was held that Mr Potts, as CFO, had access to more up to date cash flow forecasts; and Mr Abboud, as Managing Director, should have been aware of, or inquired about, these cash flow forecasts as he was aware of the company’s challenges with paying creditors on time. Neither director was found to have breached their duty by approving the interim dividend in February, however they were found to have breached their duties relating to the final dividend in August because by then information was available to them which suggested that the company would significantly exceed its facility limit and paying the dividend would cause delays in payment to creditors.

They were held personally liable to the company for damages equal to the full amount of the final dividend payment ($11.8 million).

It is key that directors ensure that true and complete financial information is included in board papers and used to consider whether a dividend should be paid (and to inquire further if they believe they are not being provided with the most up to date information), and to consider whether in light of all information, paying a dividend can be done without affecting the company’s ability to repay creditors on time.


Negotiating payment terms with large enterprise customers?

A reminder that the Payment Times Reports Register provides information that reporting entities (which is mostly large businesses) include in their payment times report. This includes their standard payment terms which can be useful for smaller businesses when negotiating a contract with a reporting entity.

(In a recent experience, we were helping one of our Alliance clients negotiate a contract to supply a large customer. The customer gave our client a template contract which said the customer would pay 45 days after the end of the month in which they were invoiced. We checked the Payment Times Reports Register – where the same customer told the Government that it’s standard payment terms were 30 days from invoice and boasted that it tried to pay smaller suppliers faster. When we pointed out the discrepancy, the customer sheepishly reverted to 30 days from invoice…)

You can find the Payment Times Reports Register at https://register.paymenttimes.gov.au/.



A selection of things taking up time outside work:

  • The Years of Lyndon Johnson – I completed Robert Caro’s 4-volume biography of Lyndon B. Johnson. Volume 4 covers the years 1958 to 1964, when LBJ swaps his power as ‘Master of the Senate’ for the impotency of Vice President in 1960, before JFK’s assassination makes him President in November 1963, through to his election win a year later. Awesomely detailed, with vivid portraits of all the main characters, including a particularly close look at the bitter rivalry between Johnson and Robert Kennedy. If you’re a US politics junkie, and can find a copy, it’s highly recommended. Caro (aged 86) is apparently working on a fifth volume, covering LBJ’s Presidency from 1964 to ’68. (Andrew)
  • American politics – deeper down the rabbit hole. Thank You For Your Servitude by Mark Leibovich – a darkly humorous and (because it’s true) deeply troubling account of how the Republican Party sold itself out to Donald Trump. Strong echoes of Hunter S. Thompson’s dispatches on Nixon and Watergate. The Next Civil War by Stephen Marche – an arresting and provocative look at the state of American politics and what might come next. Each chapter presents a thinly fictionalised and near-term future event (say, an armed standoff between a Texas sheriff and the Federal Government; or a Presidential assassination) and plots out the stepping stones from here to there, including the breakup of the Union. The Authority of the Court and the Peril of Politics, by Stephen Breyer. This short book, by recently retired US Supreme Court Justice Breyer, attempts to show how the Court has, over time, earned public trust, and how this could be lost. Of course, the premise that the Court is not political is a big leap of the imagination. (Andrew)
  • What’s on my turntable?Malcolm After Mecca, by So.Crates. US-raised and Melbourne based hip-hop and neo-soul artist. File with Jazzmattaz by Guru, LL Cool J and Warren G’s Regulate. (Andrew)
  • Love Stories, Trent Dalton – Trent Dalton asks everyday Australians a simple but very direct question – “can you please tell me a love story?”. This book is those stories, observations and reflections interspersed with Trent’s own reflections on special moments and love stories that have made him the writer (and man) he is today. (Roxie)
  • Hairspray the Musical – I was lucky enough to take my two daughters to watch Hairspray the Musical during these school holidays. Hairspray is a fun, upbeat story set in the 1960’s about Tracy Turnblad, a teenage girl obsessed with making her mark by joining the cast of a popular dance show. The performers were outstanding as they belted out classics such as ‘Good Morning Baltimore’ and ‘You can’t stop the beat’. The musical sparked great conversations between my girls and I about positive body image, racism and standing up for what you believe in. (Yee)
  • IDES – located at 92 Smith Street Collingwood, IDES is quickly becoming a true Melbourne institution. Being an offspring of Attica, IDES’ everchanging degustation menu is unsurprising. I guess not knowing what to expect until the night of, is all part of IDES’ charm! The highlight is a chocolate dessert presented in a wooden puzzle box that must be strategically opened before consumption. If you are looking for an interesting and fun dining experience, IDES will tick all the boxes. (Kathy)