ASX guidance re Corporate Governance Statements
09/09/2019
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The ASX has released a fourth edition of its guidance note 9, providing guidance to ASX-listed organisations on implementing the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.

This guidance will become effective on 1 January 2020.

Along with wording and procedural changes to suit the new version of the Principles and Recommendations, the guidance note provides:

  • A laundry list of information boards need to disclose on their website or in their annual report to follow all the Council’s recommendations.
  • A plea to companies to move beyond the letter of the law and use the corporate governance statement to display their corporate governance prowess.
  • Differentiation between Appendix 4G and the Corporate Governance Statement:

The Corporate Governance statement is a statement disclosing “the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period”. Companies must disclose the “why not” here if they have not complied with the recommendations.

Appendix 4G, meanwhile, is intended to act as a “key” to assist readers to locate the governance disclosures. Firstly it says where the corporate governance statement can be found. Secondly it has a table listing every recommendation and, if there is a disclosure requirement in the recommendation, where that disclosure can be found including relevant page numbers or URLs if the disclosure is not made in the corporate governance statement.

  • Closes a loophole for disclosing policies, including diversity, whistle-blower, etc. The guidance notes that some companies have been disclosing policy-lite versions publicly which will be supplemented for staff use by “guides”, “procedures” or “processes”. It notes that if the issues listed in the commentary to the recommendation are not largely covered in the disclosed policy but rather in the supplementary guide, the ASX expects companies to disclose both.
  • Provides additional guidance around meeting diversity recommendations, for example as regards setting and reporting progress against measurable diversity objectives.
  • Explicitly states there is no prescribed format for board skills matrixes and notes that either the board’s current skill set can be outlined (as a whole) or the mix of skills the board is looking to achieve.
  • Provides clarification on which reports are intended to be captured by recommendation 4.3, which requires a statement on how the organisation ensures the integrity of unaudited periodic corporate reports.
  • Acknowledges that investor presentations may be broadly the same while tailored for different audiences and must therefore not be republished to the ASX each time for such small changes.
  • Notes that some companies have been publishing share plan rules to show they have a policy on whether participants are permitted to enter into transactions which limit the economic risk of participating in any equity-based remuneration scheme, when actually this policy is contained in the securities trading policy.

A marked up version of the guidance note can be found HERE.

© Guerdon Associates 2021
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