What is the ASX Corporate Governance Council?
The ASX Corporate Governance Council (Council) first convened in August 2002, brings together various stakeholders that each offer insight and expertise on corporate governance issues. As Justice Owen stated in the HIH Royal Commission, the phrase ‘corporate governance’ refers to the ‘framework of rules, relationships, systems and processes within and by which authority is exercised and controlled within corporations. It encompasses the mechanisms by which companies and those in control are held to account.’
What are the Council’s Corporate Governance Principles and Recommendations?
On 27 February 2019, the Council released the fourth edition of its Corporate Governance Principles and Recommendations (Principles). The Principles provide recommendations on corporate governance practices to be adopted by ASX-listed entities. As such, the intention is to promote investor confidence and assist listed entities to meet stakeholder expectations.
As per Listing Rule 4.10.3, ASX-listed entities are required to benchmark their corporate governance practices against the Principles. An “if not, why not” approach is taken, whereby a listed entity must disclose the reasons why practices are not adopted, if recommended by the Principles.
Within the Principles are 35 specific recommendations of general application intended to give effect to 8 overarching principles. Amendments to the overarching principles as well as the new recommendations are summarised below, in addition to comments that contextualise the changes. The key changes are those which differ to the 3rd edition of the Principles, as well as the draft of the 4th edition Principles, which was published in consultation on 2 May 2018 (Draft).
The Principles will take effect for a listed entity’s first full financial year commencing on or after 1 January 2020.
This article was co-authored by Nick Golding, Director and Millie Clayton, Graduate Lawyer.