Requirement to Have a “Whistleblower Policy” Commences 1 January 2020: ASIC consults on new guidance for companies on whistleblower polices

Published
15 August 2019

On 7 August 2019, the Australian Securities & Investment Commission (ASIC) announced it was seeking public input on its to-be-published guidance on the new legal obligation for companies to implement a whistleblower policy. This relates to the upcoming requirement commencing on 1 January 2020 that all public and large proprietary companies must have in place a whistleblower policy and make it available to their staff. This requirement to have a whistleblower policy is part of the new whistleblower regime that commenced on 1 July 2019 following the enactment of the Treasury Laws Amendment (Enhancing Whistleblower Protections) Act 2019 (Cth) that amended the Corporations Act 2001 (Cth) (Corporations Act).

ASIC has put together a draft guidance document on implementing whistleblower policies and is now seeking feedback from entities, their advisors and interested persons before the publication of the final document in October.

 

The New Whistleblower Policy Requirement

The requirement for public and large proprietary companies to have a whistleblower policy arises under section 1317AI of the Corporations Act. This requirement will be enforced from 1 January 2020, and the whistleblower policy must be made available to employees and officers of the company. The policy must inform employees and officers of the following:

  • protections that are available to whistleblowers
  • to whom disclosures that qualify for protection may be made and how these disclosures may be made
  • how the company will support and protect whistleblowers from detriment
  • how the company will investigate disclosures that qualify for protection
  • how the company will ensure fair treatment of employees involved in disclosures
  • how the policy will be made available to officers and employees.

Failure to comply is a criminal offence and will result in significant penalties. For further information, refer to our previous School Governance article.

 

Potential Exemptions

 ASIC is currently seeking views from the public on the following two matters:

  • whether public companies that are small not-for-profits or charities should be exempted from the requirement to have a whistleblower policy
  • if an exemption is considered appropriate, the most appropriate size threshold to determine if a public company is a “small not-for-profit or charity”, and therefore exempt.

ASIC’s power to provide relief by exempting small not-for-profits (NFPs) will only be used by ASIC if the benefits in encouraging good corporate culture and governance are outweighed by reduced flexibility and imposing unnecessarily high compliance costs on small NFPs. Given this and the fact that the policy reasons for the whistleblower laws are to encourage more disclosures, and to generally foster an ethical culture within the Australian private sector, we anticipate that ASIC will only grant relief from the requirement to have a whistleblower policy for public companies that are small NFPs or charities in terms of revenue and staff/volunteers. If ASIC does grant this relief, it should be noted that the other sections of the whistleblower laws already in force will continue to apply.

 

How Does This Apply to Schools?

Schools will firstly need to establish whether they are a public or large proprietary company in order to determine if they are required to have a whistleblower policy in place by 1 January 2020.

Many schools are companies limited by guarantee. A company limited by guarantee is a (type of) public company registered under the Corporations Act. Therefore, if a school is a company limited by guarantee, it is a public company and must comply with the requirement to have a whistleblower policy in place by 1 January 2020.

However, even if a school is not a public or large proprietary company (instead it may be an incorporated association registered under a state-based law such as the Associations Incorporation Act in a particular state or established under a particular Act of Parliament) and therefore not directly subject to this requirement, it is nevertheless best practice for any organisation to have a whistleblower policy in place, in order to protect employees and officers if the need to ‘blow the whistle’ arises. It is also best practice for a school to have robust complaints handling procedures and internal grievance processes in place to ideally avoid the need for employees to resort to ‘blowing the whistle’.

 

How Should Schools Prepare?

After determining their corporate status, schools should begin preparing for the 1 January 2020 commencement date by developing a whistleblower policy that complies with the requirements of the Corporations Act to avoid committing a criminal offence.

ASIC will be receiving feedback until 18 September 2019.

Soo Choi

Soo Choi is a Legal Research Assistant at CompliSpace. She is currently studying a Bachelor of Arts and Bachelor of Laws at the University of Sydney.