Governance Insight | New ASX Corporate Governance Principles

Corporate Snapshot – July 2019
July 11, 2019
2019 Governance Institute Award
July 24, 2019

New ASX Corporate Governance Principles

 

The ASX Corporate Governance Council’s fourth edition of its Corporate Governance Principles and Recommendations has been released. Seven new recommendations and updates to the previous 28 recommendations are aimed at increasing the focus on corporate culture and values and represent a broader set of governance considerations and meeting community expectations.

All listed entities will be required to measure their governance practices against the recommendations from 1 January 2020.

 

Culture and Values

One of the most notable changes is the emphasis on the importance of culture, values and the need to move away from the short term pursuit of profits to a focus on delivering long term benefits and meeting community expectations. This echoes the overarching findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The recommendations state that an entity should articulate and disclose its values; the connection between remuneration practices and company culture is also called out.

 

Board and Directors

The Board is expected to set the tone from the top – defining the entity’s purpose and approving its values statement and code of conduct.

Boards should have an appropriate number of independent directors, ensure that there is an effective framework for management reporting to the board and hold management to account.

Directors should receive copies of material market announcements promptly so that they are properly informed.

 

What do listed entities need to do next?

Listed entities need to review their Governance Frameworks to ensure that the relevant charters and policies are updated and adopted to meet the revised recommendations. These include:

  • Board Charter
  • Code of Conduct for Directors, Executives and Employees
  • Diversity Policy
  • Continuous Disclosure Policy
  • Whistleblower Policy
  • Anti-bribery and Corruptions Policy

The Council encourages early adoption, and whilst listed organisations are not obliged to adopt the principles and recommendations, companies need to report on any principles and recommendations that they decide not to adopt and outline why they have not been adopted.

 


Please contact Mertons if you would like advice or support in meeting the recommendations.

markl@mertons.com.au | 03 8689 9997