As you will be aware, the ASX Corporate Governance Council has released its Principles of Good Corporate Governance and Best Practice Recommendations. These guidelines have been developed during the past seven months through consultations with 21 stakeholder groups, in which the AICD took part.
On launching the guidelines on 31 March, chairman of the ASX Corporate Governance Council, Karen Hamilton, described the guidelines as a "starting position" and "evolutionary" in nature. AICD fully supports the 10 essential corporate governance principles and accepts the spirit and intent of the best practice recommendations. As strict confidentiality provisions of the Corporate Governance Council prevented broad consultation until its release, we have initiated a consultation process to gather the views of both our existing members and the broader community of company directors.
I have written to Australia's 5188 listed-company directors seeking their feedback on the guidelines and members have been notified by email of the opportunity to comment. Seminars hosted by each State Division on the new measures will offer another opportunity for concerns to be raised. We expect the ASX Corporate Governance Council to respond promptly to any issues identified in our consultation process.
This is one of the most significant documents on corporate governance and the AICD firmly believes Australia's approach should benefit from the same level of scrutiny and reflection adopted by other markets undergoing a similar governance review process.
The comprehensive nature of the best practice recommendations demands exhaustive analysis by directors. While adoption of the guidelines is voluntary, companies that do not comply must explain why. As of 1 April 2003, companies will be required to consider these guidelines in all reporting so your attention to these changes is essential.
The change in reporting applies to the company's first financial year commencing 1 January 2003. Where a company's financial year begins on 1 July, disclosure will be required in relation to the financial year 1 July 2003-30 June 2004 and will be made in the annual report of 2004. From then on, reporting will be monitored by the ASX and in the event of failure to comply, the ASX will issue a "please explain" notice and will reserve the right to refer any non-disclosure to the Australian Securities and Investments Commission as a breach of the listing rule.
ASX CEO Richard Humphrey sees the coming reporting season as an ideal opportunity to road test the guidelines and invites feedback so that fine-tuning of the guidelines may take place.
Through our consultation process, we offer you the opportunity to share your views on the guidelines so that we may feed them back into the council.
If you have not already done so, I encourage you to review the Principles of Good Corporate Governance and Best Practice Recommendations, a copy of which is posted on www.companydirectors.com.au, and complete the associated survey form provided on the website, or the form provided as an insert to this edition of Company Director.
In reviewing the document you may wish to turn to:
- Page 73: summary of best practice recommendations.
- Pages 19&20: assessment of what constitutes independence of directors. The independence criteria includes the requirement that the person has not been a material professional adviser or material consultant to the company or an employee materially associated with the service provided within the past three years.
- Pages 51-57: enhanced disclosure of the remuneration of the five highest paid (non-director) executives and all directors.
General business acceptance of the guidelines is essential for the effectiveness of the new guidelines. Please take the opportunity to have a say in the future of Australia's corporate governance culture. I welcome your views.
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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