Changes to ASX’s Corporate Governance Principles and Recommendations

On 27 February 2019 ASX’s Corporate Governance Council released the fourth edition of its Corporate Governance Principles and Recommendations (Recommendations) following extensive public consultation. The Recommendations are to take effect for an entity’s first full financial year commencing on or after 1 January 2020, although listed entities are able to adopt the new Recommendations earlier if preferred.

The format of the Recommendations remains largely unchanged from the previous version and encompass substantially the same 8 existing core principles (aside from some material changes to Principle 3 – Culture and Values), along with accompanying recommendations and commentary. The Recommendations maintain the ‘if not, why not’ approach to disclosure from the previous version as well as the flexibility for entities to make the relevant disclosures either on their website or in their annual reports.

Overall, the Recommendations contain 7 new general application recommendations including 3 recommendations aimed at addressing an entity’s culture and values echoing a clear focus from ASX to ensure boards and senior management set a cultural tone from the “top down”. Briefly, the 3 new recommendations comprise:

• articulating and disclosing an entity’s values;
• instilling and continually reinforcing a culture across the organisation of acting lawfully, ethically and responsibly; and
• having and disclosing both a whistleblower policy and an anti-bribery and corruption policy.

Further changes include disclosure around verification of the integrity of corporate reporting, providing new and substantive investor or analyst presentations to the market ahead of time, ensuring any substantive resolutions at shareholder meetings are decided by a poll rather than a show of hands and requiring an entity to have a written agreement with each director and senior executive personally (rather than via a corporate entity).

For more information on the changes to ASX’s Corporate Governance Principles and Recommendations and how your organisation can address and update its disclosures ahead of the commencement of their operation, or if you have any general questions, please contact Alfonso Grillo and Tom Sapountsis.

Partner
agrillo@grillohiggins.com.au

Associate
tsapountsis@grillohiggins.com.au