Corporate Governance in The Asia-Pacific (Australia)
Key characteristics
Legal system - common law
Board structure - Unitary
Predominant ownership structure - Institutional investors; non-institutional shareholders (corporate or family)
Important aspect - More emphasis on shareholder rights in recent years; also board diversity
Main business form - Public corporations
Structure the board to add value
the chairperson should be an independent director
the roles of chairperson and CEO should not be exercised by the same individual
the majority of the board should be independent directors
the board should establish a nomination committee
various information relating to directors
including their skills, experiences and expertise
the names of the members of the nomination committee and their attendance at the meetings
included in the CG section of the company's annual report
Promote ethical and responsible decision making
company should clarify the standards of ethical behaviour required of company directors and key executives
encourage the observance of standards
publish its policy as regards board and employee trading in company securities and related products
3 recommendations support this principle
there should be a code of conduct to guide the directors, CEO, and CFO and any other key executives in relation to practices necessary to maintain confidence in the company's integrity
the responsibility and accountability of individuals for reporting and investigating reports of unethical practices
disclosure of the policy concerning trading in company securities by directors, officers, and employees, and provision of information in relation to any departures from the aforesaid recommendations
Safeguard integrity in financial reporting
board should establish an audit committee, consists at least 3 members and should comprise only non-executive directors majority are independent
The audit committee should be chaired by an independent chairperson who is not the chairperson of the board
The CEO and CFO should be required to state in writing to the board that the financial reports present a true and fair view
Audit committee should have a formal charter
Information should be disclosed include;
the names and qualifications of those appointed to the audit committee, the number of mee
the number of meetings of the audit committee
the names of those attending the meetings
Make timely and balanced disclosure
all investors have equal and timely access to information about the company
concept of balance requires disclosure of both positive and negative information
2 recommendations
written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level for that compliance be established
certain information should be disclosed, inc explanation from any departures
Respect the rights of shareholders
the company should design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings
company should request the external auditor to attend AGM and to be available to answer shareholder questions about the conduct of the audit and preparation and content of the auditors report
Recognize and manage risk
the CEO and CFO should state to the board in writing that they have made their statement about the integrity of the financial statements based on the sound system of risk management and internal control and compliance
explanations should be provided of any departures from the aforesaid best practice recommendations
the board or appropriate board committee should establish policies on risk oversight and management
Encourage enhanced performance
there should be disclosure of the process for performance evaluation of the board, its committees and individual directors, and key executives
Remunerate fairly and responsibly
there should be a clear distinction between the structure of non-executive directors' remuneration and that of executives
The board should establish a remuneration committee
disclosure should be provided of the company's remuneration policies to enable investors to understand the costs and benefits
payment of equity-based executive remuneration should be made in accordance with thresholds set in plans approved by shareholders
there should be disclosure of various aspects, inc the remuneration policies, the names of the remuneration committee members and their attendance at meetings
Recognize the legitimate interests of stakeholders
one recommendations; companies should establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders
by better managing various stakeholder groups, value can be created
under ASX Listing Rules, companies are required to provide a statement in their annual report disclosing the extent to which they have followed the best practice recommendations