The ASX Corporate Governance Council has released for public comment a
a consultation paper entitled Review of the Corporate Governance Principles and Recommendations and a draft of the proposed third edition of the Principles and Recommendations.
The draft third edition of the Principles and Recommendations maintains the 30 recommendations in the current second edition, but it has been revised and restructured to improve readability.
Substantive changes have also been made including:
- introducing a new recommendation requiring listed entities to have a clawback policy for performance-based remuneration from its senior executives;
- a new recommendation that listed entities establish a risk committee, either on a stand-alone basis or as part of the responsibilities of the audit committee;
- expanding the categories of relationships that may indicate that a director may not be independent to include a person with “close family ties” with a shareholder, director or senior employee, a professional adviser or consultant, a material supplier or customer as well as a person who has been a director for more than 9 years;
- allowing entities to treat the reporting of their “Gender Equality Indicators” under the Workplace Gender Equality Act 2012 as satisfying their obligations to report their gender statistics under the Principles and Recommendations;
- giving greater flexibility to listed entities to make their governance disclosures on their website rather than in their annual report.
Some changes are needed to the ASX Listing Rules to give effect for listed entities to the reforms proposed in the third edition of the Principles and Recommendations.
