The past year has been a big one for business, with unprecedented activity in the corporate and commercial legal world, including legislative changes and increasing activity from regulators. With an upcoming state election in March and a likely Federal election to follow, the Banking Royal Commission Final Report due shortly and the Aged Care Royal Commission starting today, the team at Australian Business Lawyers & Advisors have been keeping a close eye on what’s coming up in 2019. In this article we discuss a few of the ‘hot topics’ that businesses should watch out for.
Election impact on Business
Elections can sometimes be challenging for business, but they can also be surprisingly rewarding. This year business owners in NSW are likely to have both a State and a Federal election within the first six months. But in both instances the incumbents are cashed up and looking to trade on their business credentials. This appears to be a fertile ground for change to revenue and red tape focused obligations. At a State level Payroll Tax changes are quickly becoming a hot topic, with the Opposition appearing to propose a roll back to recently announced pro-business changes by Premier Berejiklian. Federally, the Labor Opposition has already proposed changes to Negative Gearing in residential property, the ability of investors to obtain cash refunds for excess franking credits and possibly also to personal Superannuation tax rates for high earners (all of which is sensitive to not only business, but also to investors and retirees). The Government is beginning to engage on all of these issues, as well as signalling a possible revamp of the Superannuation industry and personal Super related issues. As mentioned below, the imminent release of the Final Report by the Royal Commission in Banking, will also generate more attention to Corporate Governance during both elections.
The Banking Royal Commission Interim Report
was submitted on 28 September 2018 and the Final Report is due to be submitted to the Governor-General by 1 February 2019. Its conclusions will certainly be closely watched by the financial services industry, business generally, directors and the community. Although one hopes for more effective
regulation and not just more regulation, we would not be surprised to see much more prescriptive regulation and removal of self-regulation (at least in the banking industry) arising out of the Royal Commission.
Of course, the next critical area to watch will be the much anticipated Royal Commission into Aged Care, which started today. This will necessarily be a hot topic in the news given Australia’s ageing population and the vulnerable persons it affects, and one which our lawyers will be providing further commentary on in due course.
As noted in our article Red Hot Regulators Focus on Business
, the regulatory environment for business in Australia will definitely be heating up in 2019. KPMG’s annual survey of business leaders indicated that with the avalanche of new regulatory requirements bearing down on Australian businesses, there is no doubt compliance is a significant concern for most businesses, and not just the banks.
The Australian Competition and Consumer Commission (ACCC)
was incredibly active in 2018, issuing nearly $170 million in penalties. Meanwhile in the wake of the Royal Banking Commission, the Australian Securities and Investments Commission (ASIC)
announced it intends to be a strategic and forceful regulator in the market, with increases in penalties and a major boost of $70.1 million in funding, meaning businesses can expect ASIC to have the means to focus on increased enforcement action and litigation.
Privacy Law, Data Breaches and GDPR
In February 2018 the mandatory data breach notification
regime was introduced in Australia, making businesses more publicly accountable for data breaches. The EU General Data Protection Regulation (GDPR)
also commenced in May 2018, affecting some Australian businesses. In particular, businesses in the digital economy that offer goods or services to persons located within the EU (including via the internet), or businesses exporting or processing any personal data from the European Economic Area.
Less than a year on, we expect data protection and privacy law compliance to be closely watched by regulators in 2019 as they test both the new Australian regime and the reach of the GDPR, the latter imposing significant penalties (4% annual global turnover, or up to 20million Euros, whichever is higher) and no small business exemption such as under the Australian Privacy Act. With an increasingly online business marketplace and savvy consumers that expect businesses to respect their privacy, it will be important for businesses and board s to:
a) Ensure you are across the relevant regulatory requirements,
b) Undertake a review of your cyber security position to reduce risks of breach, and
c) Be ready to deal with notification obligations swiftly by putting in place a Data Breach Response Plan.
PPSR Registrations expiring on 30 January 2019
The 7 year anniversary of the introduction of the Personal Property Securities Register (PPSR)
is fast approaching. Over 120,000 seven year security interests were registered when the PPSR was first established and they will expire in the next few weeks. Remember, some registrations were automatically transferred from other registers to the PPSR, so even if you don’t think the upcoming deadline applies to you, it’s best to double check.
Once your registration expires, if you failed to renew your security interest before the expiry date it will lapse and become unsecured. This means you may lose priority and rank behind other creditors with current security interests (ie. you run the risk of losing assets if a customer defaults on payment or becomes insolvent).
Now is the time to:
a) Check your registrations and determine which ones are due for renewal,
b) Review the details of any registrations and make any necessary updates, and
c) Extend your registrations to continue to secure your interests.
General Business ‘To Do’ List
So what else should be on your business housekeeping ‘to do’ list for the New Year?
- Review your standard contracts - There were numerous cases considering the application of unfair contract laws in 2018 and what sorts of terms are ‘unfair’, particularly in relation to contracts with small businesses. If you haven’t had your terms and conditions reviewed recently, now is the time to do so to ensure your contracts are compliant and enforceable, and not breaching any competition or consumer laws.
- Protect your Brand - So many businesses do not adequately protect their brand by properly utilizing registered trade marks for their main business trading name or products. Did you know a business or company name is not enough to give you exclusive rights over a name? Ask us about our fixed fee trade mark service and make sure your most valuable asset is protected.
- Business structure and business partners - Has your business grown quickly and you just never got around to having someone review your business structure, or perhaps you never signed a shareholder or partnership agreement and now are thinking about exiting or getting rid of a not-so-productive business partner? Maybe you’re considering bringing on investors and/or issuing shares in your company? This is a very risky area and you should seek qualified legal advice before giving away any size stake in your company or even just make sure your ‘house’ is in order.
If you have any questions or concerns about your company’s business practices, contact one of our Corporate and Commercial lawyers today on 1300 565 846 or email us at firstname.lastname@example.org and get your business sorted for 2019.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.