On 20 February 2025, the ASX Corporate Governance Council (CGC) killed off the consultation process on a proposed fifth edition of the Corporate Governance Council Principles and Recommendations (the Principles). The consultation commenced more than a year ago. The CGC had received 109 submissions (31 on a confidential basis), including our own.

Guerdon Associates supported most of the deletions (see HERE and HERE). Although we were happy with the deletions, we were less than happy with some proposed additions and amendments (see HERE).

It has been reported that there have been conflicting views within the CGC on specific changes, including concerns about inclusion of board director diversity characteristics other than gender.

This proposal would have seen directors of ASX listed companies having to disclose personal characteristics such as sexuality, age, indigenous heritage and disabilities to their companies and then to shareholders.

Other market participants have voiced opposition to the growing prescription of the Principles and the extent to which they are an impediment to international investment.

The various pushbacks against extending the DEI requirements and disclosures for ASX-listed companies came well before the US President Trump’s election and his Executive Orders on DEI matters. Rather, they reflect growing discomfort for increasing regulation that adds costs, invades privacy, and reduces board flexibility.

Tanarra Capital’s John Wylie favours of a rewrite of the Principles and Recommendations. He has proposed a simpler six page set of governance principles (see HERE).

One aspect worth noting in Tanarra Capital’s principles is a call for annual director elections, as in the US and UK. And, no more than 9- or 10-year terms.

There has been public support from well regarded directors for Tanarra’s suggested principles.

One observation for the increased governance requirements over the last fifteen or so years is that they have arisen because of the loss of trust in boards and management that followed the global financial crisis (GFC) of 2007 – 2009.

Principles based governance standards may be deemed appropriate for trusted boards. Annual elections would permit cleaning out boards that cannot be trusted. But some argue that they could also discourage risk taking and encourage short-termism.

Out of 812 Director election resolutions for the ASX 300 during calendar year 2024, only 5 directors did not receive the 50% support to be reappointed, raising a question as to whether annual elections would be useful. The five were not board endorsed nominees.

The ASX CGC’s press release is HERE.

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