What is on the legislative agenda

Federal Parliament has important governance issues to deal with in its final sittings before the election, writes Louise Petschler GAICD. Members can also access a new interactive dashboard on NFP governance study findings.

Governance debates in Parliament

Parliament returned in February for final sittings before the federal election. There are a few important governance issues on the legislative agenda.

One is reform to allow permanent capacity to communicate electronically, e-sign corporate documents and hold virtual-only AGMs (subject to constitutions). The Bill was due to be considered by the Senate in February.

At the time of writing, AICD is optimistic that the legislation will be passed as a priority. But with the temporary relief for e-communication and virtual meetings due to expire at the end of this month, companies with December year-end are facing further uncertainty with AGM planning.

There may be a case for ASIC to apply the new temporary relief powers it has been granted given ongoing pandemic impacts and uncertainty, particularly for December 2021 year-end organisations.

Directors planning for the mini-AGM season can review the AICD’s Joint Guidance on AGMs, prepared with the Law Council, Governance Institute and ARIA. 

Other current issues include law reform to require that members of class action lawsuits receive the majority of any settlement payment, subject to court approval.

Regulation of proxy advisers in Australia is also topical. In December 2021 the Government regulated to require all proxy advisers to have Australian Financial Services Licences for governance vote research from February 2022. The AICD has long argued for licensing of proxy advice and considers this a welcome and overdue move.

The regulations also require further disclosure by superannuation funds on governance votes, and create a new structural independence requirement between proxy advisers and their clients (commencing from July 2022). While the AICD strongly endorses independence in proxy advice, we have not argued for the structural independence requirements that the regulations impose. Further parliamentary review is anticipated on these contested regulations.

Also on the current regulatory radar are cyber governance, the new Financial Accountability Regime (extending a BEAR-like regime to all APRA-regulated entities) and the independent review of Australian Securities and Investments Commission by the Financial Regulatory Assessment Authority.

NFP governance dashboard

Last month, the AICD launched a new interactive dashboard that allows members to dive into the results of the 2021 NFP Governance and Performance Study.

For the first time, results from more than 2000 responses to the survey can be easily analysed by location, sub-sector and/or organisation size. Our aim is to support better understanding of the complexity of the NFP sector and the diversity of challenges facing directors based upon these factors and to share our landmark NFP sector study more widely.

A series of monthly articles will this year will also dive deeper into the Health & Residential Aged Care, Social Services and the Arts, Culture, Sport & Recreation findings.

The dashboard and 2021 Study Report can be found in the AICD’s NFP Resource centre. 

Governing innovation

In 2019, the AICD released our Driving Innovation: the boardroom gap study with University of Sydney. This research highlighted innovation gaps at the non-executive director level, finding that Australian boards are not prioritising innovation to the extent seen overseas and that only half of Australian businesses report that they are “innovation active”.

Since then, the pandemic has forced many organisations to embrace digital transformation and new forms of innovation. In AICD’s most recent Director Sentiment Index, 59 per cent of all directors say they are eagerly prioritising improving digital capabilities on boards, more than they are prioritising gender (51 per cent), age (38 per cent), and ethnic (36 per cent) diversity.</p>

AICD is continuing to promote and support director engagement with:

Digital Directors, a new 10-part webinar series supported by the Federal Government’s Digital Director’s Initiative via the Department of Industry, Science, Energy & Resources. 

Company Director’s Directors on Digital podcast, hosted by Alan Kohler AM, covering digital and innovation topics from a boardroom perspective.

AICD is also collaborating with local and international experts on an upcoming director Innovation Handbook. The handbook will provide a framework for boards to drive effective innovation practices, highlighting the inhibitors and enablers related to innovation.

This resource is being developed with the support of AICD’s Governance of Innovation and Technology Panel and will launch in coming months.