Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate...
-
Upload
hailey-worthen -
Category
Documents
-
view
220 -
download
0
Transcript of Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate...
![Page 1: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/1.jpg)
Evolutionary not Revolutionary:Coming to grips with the 3rd edition of the ASX Corporate Governance Council’s
Corporate Governance Principles and Recommendations
Cathy Oster, General Counsel/ Joint Company Secretary, Beach Energy
Justin Nelson, Special Counsel, DMAW Lawyers
Adelaide – Thursday, 5 June 2014
© Governance Institute of Australia
![Page 2: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/2.jpg)
Presentation outline
• Key points• Principles – a refresher• Key new recommendations• Other new recommendations or enhancements • Consequential ASX listing rule changes
![Page 3: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/3.jpg)
Key points
• What has not changed• Third edition maintains the non-prescriptive, flexible, “if
not, why not” approach to disclosure• Nine new substantive recommendations• Greater flexibility to make governance disclosures via
the website• Effective date• Early adoption
![Page 4: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/4.jpg)
Principles – a refresher
• Principle 1 – Lay solid foundations for management and oversight
• Principle 2 – Structure the board to add value• Principle 3 – Act ethically and responsibly• Principle 4 – Safeguard integrity in corporate reporting• Principle 5 – Make timely and balanced disclosure• Principle 6 – Respect the rights of security holders• Principle 7 – Recognise and manage risk• Principle 8 – Remunerate fairly and responsibly
![Page 5: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/5.jpg)
Key new recommendations
Recommendation 1.2• A listed entity should:
undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director; and
provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director.
![Page 6: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/6.jpg)
Key new recommendations
Practical issues: consent to undertake checks; what is an appropriate check – character,
experience, education, criminal record, bankruptcy; contrast requirement that a police check and
bankruptcy search mandatory for directors in an application for listing on ASX;
material adverse information from checks to be disclosed.
![Page 7: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/7.jpg)
Key new recommendations (cont.)
Recommendation 1.3• A listed entity should have a written agreement with
each director and senior executive setting out the terms of their appointment.
Practical issues: key topics in a (letter) agreement for a NED: term, time
commitment, committees, board specific policies, fee structure, disclosure of interests and conflicts of interest, D&O cover details, deed of indemnity, the right to information and access, the test of independence.
![Page 8: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/8.jpg)
Key new recommendations (cont.)
Recommendation 1.4• The company secretary of a listed entity should be
accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.
Practical issues: update company secretary PD to align
accountability; update board charter where it includes the role of
the company secretary.
![Page 9: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/9.jpg)
Key new recommendations (cont.)
Recommendation 2.2• A listed entity should have and disclose a board skills
matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.
Recommendation 2.6• A listed entity should have a program for inducting new
directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.
![Page 10: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/10.jpg)
Key new recommendations (cont.)
Practical issues: disclose specific skills and diversity but not linked to
particular directors – not broad statements; gender, location, nationality, tenure / industry
knowledge, governance and regulatory matters, strategy, management and leadership, financial competence, public policy, risk management and HSE;
no disclosure of sensitive information; understanding skills and any skills gaps can focus
professional development program for directors.
![Page 11: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/11.jpg)
Key new recommendations (cont.)
Recommendations 7.1, 7.3 and 7.4 - Risk• Highlight a heightened focus on risk management
Recommendation 7.1 – The board of a listed entity should have a risk committee or explain how the board oversees the entity’s risk management framework.
Recommendation 7.3 – A listed entity should disclose if it has an internal audit function.
Recommendation 7.4 – A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks, and if it does, how it manages those risks.
![Page 12: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/12.jpg)
Key new recommendations (cont.)
Practical issues: sustainability – reflects increasing focus by
stakeholders and proxy advisers on responsible business conduct;
can refer to a sustainability report to comply; material exposure – real possibility of substantive
impact to create/preserve value over short/medium/long term;
see ASIC RG 247 – operating and financial review also addresses this issue.
![Page 13: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/13.jpg)
Other new recommendations
Recommendation 4.3 – A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit.
Recommendation 6.1 – A listed entity should provide information about itself and its governance to investors via its website.
Recommendation 6.4 – A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.
![Page 14: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/14.jpg)
Consequential ASX listing rule changes
• Listing rule 4.10.3 (corporate governance disclosures) amended to afford greater flexibility to listed entities to make their corporate governance disclosures either in their annual report or on their website;
• Listing rule 4.7 (entity to give ASX annual report) – amended to require a listed entity to lodge with ASX: a completed Appendix 4G; and if the entity chooses to include its CGS under listing
rule 4.10.3 on its website rather than in its annual report, a copy of the CGS, at the same time as it lodges its annual report with ASX.
![Page 15: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/15.jpg)
Questions?
![Page 16: Evolutionary not Revolutionary: Coming to grips with the 3 rd edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.](https://reader038.fdocuments.net/reader038/viewer/2022110205/56649cbf5503460f94985d11/html5/thumbnails/16.jpg)
© Governance Institute of Australia