[Centres] FW: Response to Box Hill (Tall Timbers) Centre re teleconference AGM

stateoffice at rdansw.org.au stateoffice at rdansw.org.au
Mon May 25 17:37:26 AEST 2020


Dear Centres

 

Apologies I did not include the attachments on the previous email 

Forwarding the email from Joe Orland to Box Hill (Tall Timbers) Centre re
teleconference AGM,  in response to the email sent by Box Hill (Tall
Timbers) Centre that was sent to all the Centres, Board and SO. 

 

 

Kind Regards

Lucy Pentony

Office Coordinator 

 

Riding for the Disabled Association (NSW)

Quad 1, Level 2, 8 Parkview Drive

Sydney Olympic  Park  NSW 2127

(PO Box 710 Sydney Markets NSW 2129)

 

Ph: (02) 8736 1256

Email:  <mailto:stateoffice at rdansw.org.au> stateoffice at rdansw.org.au

Web:  <http://www.rdansw.org.au/> www.rdansw.org.au

 



       

 



 

    

 

 

Dear Elaine.

 

Thank you for your commentary in response to the Board's Survey for the
possibility of holding the RDA (NSW) AGM by teleconference as contained in
the email dated 18 May 2020 that you sent to the Board and all Centres.
This email is to respond to the comments made by the Box Hill Centre in
relation to that Survey and as your email went to all Centres, it is
appropriate that this response goes to the same people.  

 

At the outset, it needs to be noted that, due to the tight time constraints,
it is, with respect, imperative, that this matter is resolved expeditiously.

 

This response is based on the latest information that I could find on the
internet up to, and including, 22 May 2020, on both the ASIC website (on the
issue regarding the possible deferral for the holding of the RDA (NSW) AGM)
and on the Australian Government's website (for the latest updates of the
Acts and Regulations as passed by the Australian Government).  There appears
to be some differences between what is contained in those websites from what
is stated in your email of 18 May 2020.

 

I have attached copies of the relevant documents to which both you and I
refer (other than the Corporations Act 2001 as it is far too big).

 

As will be explained in the response below, it is absolutely crucial that
this matter is resolved in the next few days if we are not going to put RDA
(NSW) at risk of breaching the concession given by ASIC.  The timetable for
things which must be done in the leadup to the AGM must be started in a few
days' time.

 

The statements made by your Centre, and the responses based on the
information as referred to above are set out below:

 

Box Hill (Tall Timbers) Centre Statement

 

We are already seeing some restrictions being lifted within NSW and it would
be reasonable to assume that an AGM could be held face-to-face in the coming
months and certainly before the "no action" extension period expires on 5
November 2020 - in accordance with the temporary modifications to the
Corporations Act under the
<https://www.legislation.gov.au/Details/F2020L00553> Corporations
(Coronavirus Economic Response) Determination (No. 1) 2020 dated 5 May 2020

 

Board response

 

While the Corporations (Coronavirus Economic Response) Determination (No. 1)
2020 to which you refer will be automatically repealed on 5 November 2020,
which is six months after the Determination commenced on 5 May 2020, that
document does not contain any reference to the extension of time for the
holding of an AGM by a public company.  It needs to be noted that RDA (NSW)
is a "public company" under the definition contained in the Corporations Act
2001.  However, it is important to examine this document for it has
relevance to the statements made by your Centre in your email.

 

It would appear that one reason for the finishing date of 5 November has
more to do with the six-month period for which the other Government
initiatives in relation to the COVID-19 pandemic are to continue and has
nothing to do with the extension of time for the holding of an AGM.   

 

Another reason would appear to be that the companies for which ASIC has
granted an "extension of time" to hold their AGM (more on this issue below)
has been extended from those companies to which the ASIC's original proposal
related, namely those that had a balancing date of 31 December (such as RDA
(NSW)) to those that had a balancing date after that date (that is, from 1
January 2020 and later).  

 

This does not mean that the Determination gives an extension of time for the
companies which have a balancing date of 31 December to hold their AGM has
been further extended.  Instead it means that companies which have a
balancing date after 31 December have also had their timetable for the
holding of their AGM extended by two months.  However this "extension of
time" to hold the AGM is not done via this Determination.

 

Instead of granting any extension of time as you infer, that Determination
sets out the following procedural matters:

1.	The ability for all public companies to hold their AGM by
teleconference during the six-month period of the Determination.
2.	The general procedures for the holding of an AGM via a
teleconference.  
3.	The procedures for signing any documents given that the meeting is
being held by teleconference.

 

These procedures apply for the period mentioned because of other matters
that do not impact upon RDA (NSW)'s obligations.  However, in view of the
comments made in relation to the due date for RDA (NSW)'s AGM, it is
worthwhile examining the Determination as it relates to the timing of the
RDA (NSW) AGM.

 

It is noted that the Explanatory Memorandum to that Determination emphasises
this issue of the requirement for companies holding their AGM within the
specified extension period:

 

"The Determination gives companies, responsible entities, external
administrators and other classes of persons certainty about how they can
meet their legal obligations for the next six months while the Determination
is in effect.

 

The Determination ensures that companies and other entities that are
required to or wish to hold a meeting, such as an Annual General Meeting
(AGM), may do so using technology rather than face-to-face meetings. The
Determination enables a quorum, votes, notices and the asking of questions
to be facilitated electronically. The Determination also allows for
information required for the meeting to be circulated and accessed
electronically."

 

This is stated in Clause 5(1)(a) of the Determination as follows:

 

"a meeting may be held using one or more technologies that give all persons
entitled to attend a reasonable opportunity to participate without being
physically present in the same place".

 

The overall effect of the operation of this Determination is contained in
Section 8 of that Determination as follows:

 

"Anything done in accordance with the modified operation of provisions
modified by this instrument is as valid and effective for all purposes as if
it had been done in accordance with those provisions in their unmodified
operation."

 

This provision, which is contained in the document referred to by you in
your email, means, as is described in the above extracts from both the
Determination and the Explanatory Memorandum to that Determination, that
companies which are ordinarily only able to hold their AGM face-to-face, are
now permitted to hold their AGM by teleconference.  

 

Therefore, up to 4 November 2020, those companies which ordinarily are only
able to hold their meetings face-to-face, under the Determination are now
permitted to hold their AGM (and any other company meetings) by
teleconference.  After that date, that is, from 5 November 2020, they will,
again, be restricted to using face-to-face meetings. 

 

This, of course, means that even companies which have a balancing date of 31
December 2019 and under their constituent documents were limited to
face-to-face meetings now have no reason, or excuse, to defer their AGM
beyond the 31 July date.  

 

Those companies which have a balance date in the period 1 January to 7 July
2020 but only had the option of holding a face-to-face meeting have also had
their method of holding their AGM modified, for the period covered by the
Determination, to allow such companies to hold their AGM by teleconference
during the extension period as provided for by ASIC.   There are other
qualifications, but they are not relevant for present purposes.

 

In turn, as is relevant for RDA (NSW), that means that there should be no
excuse for companies which have a balancing date of 31 December 2019 not
holding their AGM by 31 July 2020.  This includes those companies which are
restricted, under their constituent document(s), to holding only
face-to-face meetings, including their AGM.  

 

The direct consequence of this is that it is highly unlikely for ASIC to
further extend the "no-action" period as was a possibility under its
original proposal in March in which ASIC stated that it will review the
situation regarding the extension to 31 July 2020.

 

As may be expected, the Board is committed to fully comply with the
provisions which are dealt with in the Corporations Act (and, under the
circumstances, in accordance with the ASIC "no-action" concession) in the
event that the AGM is held by teleconference.  

 

In this context, it is important to note that the RDA (NSW) Constitution
permits the holding of an AGM by teleconference, and therefore the
obligation that the Directors have to ensure that RDA (NSW) complies with
its legal obligations regarding the holding of the AGM in accordance with
the law (as affected by the "no action" decision by ASIC).

 

===============================================

 

Box Hill (Tall Timbers) Centre Statement

 

The deadline of 31 July 2020 is no longer applicable

 

Board response

 

The latest publication on the ASIC website which is specifically in relation
to the issue of the "extension of time" for the holding of an AGM that
affects RDA (NSW) is dated 20 March 2020 ("20-068MR Guidelines for meeting
upcoming AGM and financial reporting requirements") and it states:

"Coronavirus (COVID-19) may temporarily impact on companies' ability to hold
an annual general meeting (AGM). This issue is most immediately relevant for
listed and unlisted public companies with 31 December balance dates that are
required to hold an AGM by 31 May 2020. For these entities, ASIC:

. Confirms it will take no action if the AGMs are postponed for two months;
that is , until the end of July

. Supports the holding of AGMs using appropriate technology".

 

This is as stated in the covering letter which accompanied the Survey.

 

There are later publications issued by ASIC, but there is yet no other
document which is readily available on the ASIC website in which an
"extension" is granted in relation to the holding of RDA (NSW)'s AGM beyond
the 31 July 2020.  Whether ASIC may, in the future, decide to alter that
date is, with respect, not something that we should speculate on as a result
of the possible legal ramifications, and penalties, that could accrue
against RDA (NSW) and its Directors under the Corporations Act 2001 if we do
not hold the AGM by 31 July 2020.  This is particularly so when considered
in the light of the Board's first response above.

 

It is noted that there are, since the above 20-068MR document was issued,
two other statements issued by ASIC in which extensions of time were dealt
with.  These statements are "20-084MR ASIC to provide additional time for
unlisted entity

financial reports" which was issued on 9 April 2020 (last updated 5 May
2020) and "20-113MR ASIC to further extend financial reporting deadlines for
listed and unlisted entities and amends 'no action' position for AGMs" which
issued on 13 May 2020 (with no subsequent update noted).

 

As the present discussion is in relation to the holding of the AGM, and not
for the lodging of financial reports with ASIC, the 20-08MR statement dated
9 April 2020 has no relevance for the present discussion and therefore no
further reference needs to be made in relation to that document.

 

In any event, as RDA (NSW) is a not-for-profit charity, it is not required
to lodge its financial documents with ASIC but with the ACNC, and the ACNC
has given a similar extension of time for companies such as RDA (NSW) to
lodge those financial documents.

 

The 20-113MR document dated 13 May 2020 deals with both the extension of
time for the lodging of financial documents and the extension of time for
the holding of a company's AGM.  

 

While the extension of time for the lodging of financial documents is not
relevant for RDA (NSW), in relation to the holding of an AGM by a public
company it states: 

"ASIC has adopted a 'no action' position where public companies do not hold
their Annual General Meetings (AGMs) within five months after the end
financial years that end from 31 December 2019 to 7 July 2020, but do so up
to seven months after year end" [emphasis added]

 

It needs to be noted that the original statement which issued in March
related to companies which had a 31 December 2019 balance date only and
advised that no action will be taken against companies provided that they
hold their AGM on or before 31 July 2020 (that is, "up to seven months after
year end".  

 

In effect, the 20-113MR document is in relation to an "extension" of two
months from the date set out in the Act for those companies which have a
balancing date between 31 December 2019 and 7 July 2020 only.  It does not
impact on those companies which have a balancing date of 31 December 2019.
However, as stated below, it is not a change in the law, and it is extremely
important to keep this in mind at all times - as will be explained below.  

 

While this later statement now extends this two-month concession to
companies that have a balance date on or before 7 July 2020, what the
statement does not do is extend the previously announced date for those
companies, such as RDA (NSW), which have a balancing date of 31 December
2019.  That date by which such companies must hold their AGM to ensure that
ASIC will not take any action against them remains seven months after
balance date, namely 31 July 2020.

 

The issue is reinforced in the document when it is stated: 

"ASIC has adopted a 'no action' position where public companies do not hold
their Annual General Meetings (AGMs) within five months after the end
financial years that end from 31 December 2019 to 7 July 2020, but do so up
to seven months after year end."

 

This is followed by the following explanation:

"ASIC had previously adopted a 'no action' position where public companies
hold their AGMs for 31 December 2019 year ends by the end of July 2020
(refer: 20-068MR Guidelines for meeting upcoming AGM and financial reporting
requirements)."

 

An issue which was tangentially referred to in the covering letter which
accompanied the Survey is explained in more detail in this 20-113MR ASIC
document which states: 

 

"We have adopted a 'no action' position in relation to the timing of AGMs
because ASIC does not have the power to grant extensions of time to hold an
AGM on a 'class basis' to all public companies.

 

ASIC's general policy on 'no-action' positions and their status is set out
in Regulatory Guide 108 No-action letters. In particular, a 'no-action'
position provides an indication as to the future regulatory action that we
might take and does not necessarily preclude third parties (including the
Commonwealth Director of Public Prosecutions) from taking legal action in
relation to the same conduct or conduct of that kind. Nor does it prevent a
court from holding that particular conduct infringes the relevant
legislation. ASIC does not represent that the conduct covered by the
'no-action' position will not be held to contravene the relevant
legislation. Nor does ASIC undertake to intervene in an action brought by
third parties in respect of such conduct." [emphasis added]

 

This latest statement by ASIC clearly restates ASIC's statement dated 20
March 2020 and reinforces the statement made by the Board in its letter
which accompanied the Survey that we have two months after 31 May, that is,
until 31 July, to hold our 2020 AGM.  

 

While it is not expected that any legal action will be taken against RDA
(NSW) as a result of delaying its AGM in accordance with the "no action"
statement issued by ASIC (that is, as long as the RDA (NSW) AGM is held no
later than 31 July 2020), the Board of RDA (NSW) is committed to ensure that
RDA (NSW) remains a responsible corporate citizen and comply by its
obligations at law (taking into account the "concession" by ASIC).

 

In none of the attached ASIC documents, nor in the Corporations (Coronavirus
Economic Response) Determination (No. 1) 2020 document and the Corporations
Act 2001, is there a statement by ASIC or by the Government which can be
construed as ASIC or the Government extending the period for RDA (NSW) to
hold its AGM to a date which is later than 31 July 2020.

 

It is extremely important to note, as is highlighted in the ASIC document
referred to above, that the holding of the RDA (NSW) AGM later than the
latest date on which it is permitted under the Corporations Act (that is, 31
May 2020) automatically results in RDA (NSW) being in breach of the
provisions of the Corporations law.  Such a breach ordinarily results in the
company and its Directors being liable to penalties.  Having said this, ASIC
acknowledges the problems caused by COVID-19 in effectively allowing the AGM
of various companies to be held later than the law allows by adopting a
"no-action" policy.  In other words, the company and its directors will not
face the prospect of legal action from ASIC.  That is the only "guarantee".

 

As also stated in the covering letter to the Survey, it is understood that
ASIC will continue to monitor the situation and may, if necessary, extend
the "no-action" period.  However, in the light of the more recent documents
issued by ASIC in which the 31 July date for companies such as RDA (NSW)
which have a balancing date of 31 December is reinforced, the Board does not
consider it appropriate, or prudent, to assume that there will be any
extension to the current "no-action" period.

 

As stated above, companies which do not hold their AGM by the scheduled date
as set out in the Corporations Act (31 May 2020 for RDA (NSW)) and have not
been given a formal extension of time in which to hold their AGM as is
provided for under the Corporations Act notionally face substantial
penalties.  

 

Therefore, as the "no-action" provision is not an "extension of time" for
the purposes of the Corporation Act, RDA (NSW) it is, technically, in breach
of the law for RDA (NSW) to not hold its AGM by 31 May and can still be
prosecuted for failure to comply with the terms of the Act.  

 

The only safeguard that we have is that ASIC will not take any action
against RDA (NSW) and its Directors provided that RDA (NSW) complies with
the "no-action" extension and holds its AGM by no later than 31 July 2020 as
per the latest document issued by ASIC.  

 

The balance of that 20-113MR statement by ASIC relates to the lodging of
financial documents with ASIC and, as stated previously, this is not
relevant to RDA (NSW)'s situation.

 

===============================================

 

Box Hill (Tall Timbers) Centre Statement

 

The cost of $3,487 for an extension is no longer applicable

 

Board response

 

With respect, this is not correct.

 

As is stated by ASIC, the "no-action" arrangement is not an "extension of
time" for companies to hold their AGM.  Under section 250P of the
Corporations Act it is stated:

 

"(1) A public company may lodge an application with ASIC to extend the
period within which section 250N requires the company to hold an AGM. 

 

(2) If the company applies before the end of the period within which the
company would otherwise be required to hold an AGM, ASIC may extend the
period in writing. ASIC must specify the period of the extension. 

 

(3) A company granted an extension under subsection (2) must hold its AGM
within the extended period. 

 

(4) ASIC may impose conditions on the extension and the company must comply
with those conditions. 

 

(5) An offence based on subsection (3) or (4) is an offence of strict
liability." [emphasis added]

 

In the covering letter to the Survey, it is clearly stated that, but for the
concession made by ASIC to "take no action" provided that AGMs for companies
with a balancing date of 31 December 2019 are held within the five months
period after the end of the company's financial year, for a company to lodge
an application for an extension of time it would need to pay the scheduled
fee of $3,487.  

 

As also stated in that letter, this fee is not required to be paid in order
to defer the RDA (NSW) AGM due to the "no-action" policy of ASIC.  The fee
has not been removed from the Corporations Act.  It is still there if a
company lodges a request for an extension of time to hold its AGM.

 

However, if RDA (NSW) does not hold its AGM on or before 31 July 2020, it
will no longer be covered by the "no-action" concession accorded by ASIC
unless ASIC grants a further extension of time, provided that the
application for an extension of time is lodged prior to the nominal end of
RDA (NSW)'s statutory period for holding its AGM, which is 31 May 2020.  

 

It is reasonable to assume that, for the reasons stated in your email in
relation to the easing of restrictions, it is highly unlikely that ASIC
would consider it necessary to extend this "no-action" period.

 

Therefore, if it appears that RDA (NSW) may need to delay holding its AGM
beyond 31 July 2020, it will be necessary for an application for an
extension of time to be applied for in accordance with Section 250P of the
Corporations Act before 31 May 2020 (which is the period within which the
company is normally required to hold its AGM).  If that happens, the
lodgement fee of $3,487 would become payable.

 

===============================================

 

Box Hill (Tall Timbers) Centre Statement

 

AGM's can be deferred without penalty until 5 November 2020

 

Board response

 

As explained in this response, the available documents which have been
issued by ASIC and the Australian Government do not support this statement.

 

===============================================

 

Box Hill (Tall Timbers) Centre Statement

 

There is no longer the time pressure to hold the AGM prior to 31 July 2020
or to apply for an extension

 

Board response

 

This is not borne out by the ASIC documents.  On the contrary, as stated
earlier in this response, ASIC has, in its 20-113MR document which issued on
13 May 2020, reinforced the 31 July 2020 date which applies for RDA (NSW)'s
AGM.

 

Given the timetable set out by the RDA (NSW) Constitution in relation to the
matters that need to be dealt with, there is an urgent need to have things
progressing towards an AGM without any further delay if we are to meet even
the 31 July 2020 "deadline".

 

It is important to note that the Constitution sets a strict timetable for
the happening of certain things in the lead-up to the AGM.  Unnecessary
delays in attending to those matters could result in either a breach of the
terms of the Constitution if we are to comply with the current concession
provided by ASIC or we breach the ASIC timetable and will no longer be
covered by the "no-action" concession.

 

===============================================

 

General comments re results of the Survey to date and related matters

 

It is noted that there have been more than sufficient responses from Centres
in favour of holding the AGM by teleconference in order to form a quorum for
holding the RDA (NSW) AGM in that manner prior to 31 July 2020, as is
permitted under the ASIC "no-action" policy.  

 

A very important statistic to note is that of those Centres which have
replied to state that they are in favour of holding the AGM by
teleconference and will take part, 25% are Centres which have also stated
that they are not able to attend a "face to face" AGM.  

 

Clearly, this is not an insignificant proportion of RDA (NSW) Centres and it
is suggested that it would be irresponsible for RDA (NSW) to ignore the
needs and interests of so many Centres when most, if not all, Centres can be
represented by electronic means, and thereby not disadvantaging those
Centres that are remote and/or for whom attendance at an AGM is not
feasible.

 

As there is no indication that the Government will lift all restrictions
against gatherings in sufficient time allow for the scheduling of a face to
face AGM before 31 July 2020 and still attend to everything that needs to be
done under the Constitution in relation to that meeting, the Board is under
a legal obligation to set a date for the AGM, with that date being on or
before 31 July 2020.  

 

The extremely limited time available in which that date needs to be set
means that the only way in which RDA (NSW) can meet its legal obligations in
relation to the AGM is to hold the RDA (NSW) 2020 AGM by teleconference.

 

The other matters raised in your email, while important, are less pressing
than the urgent need to ensure that RDA (NSW) complies with its strict
obligations under the Corporations Act.  Accordingly, they will be responded
to soon in a separate email.

 

Regards,

Joseph Orland

Honorary Director, Finance Officer & Company Secretary

 

Riding for the Disabled Association (NSW)

Quad 1, Level 2, 8 Parkview Drive, Sydney Olympic Park, NSW

(PO Box 710  Sydney Markets  NSW  2129)

 

Ph: (02) 8736 1256   Mob: 0407 004 019

Email:  <mailto:stateoffice at rdansw.org.au> joseph.orland at rdansw.org.au

Web:  <http://www.rdansw.org.au/> www.rdansw.org.au

 

"Riding Develops Abilities"

 

        

Donations of $2.00 or more are tax deductible

   

         

 

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