In recent months there has been a veritable global downpour with the UK, the US and Australia all scrambling to set up a new system of corporate governance.AICD's view
In recent months there has been a veritable global downpour with the UK, the US and Australia all scrambling to set up a new system of corporate governance. The rush to set up new rules is a direct result of the Enron/HIH-type scandals that have rocked the markets. The US stock exchange was the first to voice its concern when it realised that what happens on Wall Street also affects Main Street.
The AICD has always considered corporate governance as one of its core issues and has set up various education courses, briefings and events around the country to keep directors informed of their duties and responsibilities in this area.
The AICD was also instrumental in encouraging the ASX to set up the Corporate Governance Council to devise new rules, a fact which Richard Humphry readily acknowledges.
Since August 2002, the ASX Corporate Governance Council comprising representatives from 21 organisations have met to discuss and come to agreement on the various recommendations. The chairman of the council wrote to us invoking strict confidentiality, a process AICD took seriously and adhered to. Others however did not and as a result the newspapers carried regular details on the proceedings.
The AICD board met regularly through this period to discuss the various drafts and was instrumental in achieving changes.
The AICD advised the ASX that without a public exposure process to AICD members and to the director population at large -as happened in the US and UK in similar circumstances -AICD was unable to endorse the document.
"The AICD board felt the proposed new guidelines were so comprehensive and their impact potentially so far reaching that the members themselves must have the opportunity to have their say," says AICD chairman,Elizabeth Alexander.
"Accordingly, we have mailed Australia's 5188 directors of publicly listed companies and e-mailed our 17,000 members and we are currently planning seminars and surveying members to ensure they are informed and to seek their views.
"The ASX has reassured that the upcoming reporting season is a road-testing period and that the guidelines are under continuous review. During the coming months we will provide members with updated information and provide every opportunity for debate and input.
The AICD will use the feedback to encourage the ASX to take this into account when reviewing the guidelines.
"According to Richard Humphry, the ASX.intends to keep ASX Corporate Governance Council in place and for it to be effective in facilitating the views of the members.
"In the last round I could simply not put a draft around for circulation to all the members of all the organisations. The fact that there were many copies of the draft circulating was regrettable. This document is not static. You have to keep it up to date.
"It would be a pity if the investment community headed off in one direction with its own rules and the AICD headed off in another with its version. This is where the role of the ASX as being a leader comes in."
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