Dr Philip Lowe on resetting the ASX’s Corporate Governance Principles

Why simplify? Cutting the clutter, not the standards

The current, fourth edition includes content that duplicates the law – including on climate disclosures and whistleblowing. It also includes “quasi recommendations” buried in explanatory notes that Dr Lowe said created confusion. The new draft draws a sharper line between principle, recommendation and explanation, and strips out key areas separately covered by legislation. It’s also a reaction to what Dr Lowe saw as governance creep.

“My own view is that in some areas we’ve gone too far. Australian directors have more individual responsibilities than directors in many other countries… What my committee can do is say, how do we build trust in the system without making it unnecessarily difficult to be in the public space,” he said. 

According to Dr Lowe, the Principles must strike a balance: maintaining investor trust while ensuring public markets remain an attractive place for companies to raise capital. That matters at a time when fewer companies are choosing to list and private capital continues to grow.

Dr Lowe said the Principles should help, not hinder. Public markets offer liquidity, price transparency and access for “mums and dads” to invest in good companies. Overly onerous listing rules can be a barrier for some companies to go public.

Eight Principles, one philosophy: “If not, why not”

Despite the overhaul, the architecture survives intact. All eight Principles remain, as does the “if not, why not” approach that lets companies explain a different path rather than forcing one-size-fits-all compliance. Dr Lowe said that was a direct response to feedback when he started the review:

“People generally like the eight principles and the if not, why not approach… But there had been regulatory overlap with existing laws, and frankly, it had become too complicated in parts and too prescriptive,” he said.

Culture moves from footnote to board responsibility

 A notable change is the stronger focus on culture and stakeholder engagement. Dr Lowe pointed to a hard lesson from recent corporate history.

“Some of the large corporate governance failures in recent years have come from cultural problems in the firm. A board has a responsibility to help management instil and reinforce a culture of acting ethically… Trust is the foundation of finance, and trust can be built easily, but it can be lost quickly," said Dr Lowe.

The role of the board is key: listed entities would need to ensure not only that the board is informed of any material breaches or trends in breaches of key policies supporting its culture, but also disclose the mechanisms the board has in place to monitor the entity’s culture.  

In practice, this might mean overseeing relevant metrics, triangulating information about culture from different sources, and pressing management with an “enquiring mind”, rather than waiting for problems to surface.

Diversity: Broader lens, same 30% floor

The draft widens diversity beyond gender, with a new requirement for boards to disclose how diversity in its composition is incorporated into succession planning. This includes diversity of thought, experience, perspectives and gender. 

"You don’t want 10 men on a board, or 10 women, or 10 people from the same private schools… Diversity gives better outcomes, and diversity has many dimensions,” he said.

However, it holds the existing objective of at least 30% of each gender on ASX 300 boards, rather than lifting it. Dr Lowe’s reasoning was that the market hasn’t finished the job it was already set.

Rather than lifting the bar to 40% now, Dr Lowe said the remaining boards must reach 30% first, revisiting the threshold at the Principles’ next scheduled four-year review.

The board skills matrix is out. Transparency is in.

The recommended board skills matrix, a staple of corporate governance statements, is no longer required to be disclosed. 

The obligation to assess the board’s collective mix of skills, knowledge and experience and disclose it to shareholders, however, stays.

Dr Lowe, speaking partly as a working director, spoke frankly about the importance of engaging in genuine reflection on skills required and present around the board table, rather than box-ticking.

"If you find [a matrix] useful, publish one," Dr Lowe says. But what the draft doesn’t do, is say it’s the only way to approach the task. 

Asked what success looks like, Dr Lowe said it is not about rules for their own sake, but rules that genuinely lift governance standards and that market participants find useful.

“We want this to be a helpful tool that directors use to manage and oversee the companies… not a compliance pain. And we want fewer corporate problems. That’s what success looks like,” Dr Lowe said.

Beyond governance: Dr Lowe on productivity and the economy

While Australian real per-capita incomes grew steadily for three decades, Dr Lowe noted that growth has stalled over the past seven to eight years as the China-driven terms-of-trade boom faded and productivity flattened.

“That stagnation means our children are not going to have a higher standard of living than us… Australia has fantastic fundamentals, but I fear we’ve lost our way,” he said.

His prescription mirrors his approach to governance itself: cut unnecessary friction through tax reform, industrial relations, lower energy costs and lighter regulation, helping to unlock the investment and innovation needed for Australia’s next phase of growth.

Consultation closes on 14 September 2026. Written submissions can be emailed to ListingsPolicy@asx.com.au. The AICD will be engaging closely with the consultation process and facilitating feedback from the director community. We welcome feedback from members. Please contact us at policy@aicd.com.au.