Please enable JavaScript.
Coggle requires JavaScript to display documents.
CORPORATE GOVERNANCE in Australia (Report on Corporate Practice and…
CORPORATE GOVERNANCE
in
Australia
Report on Corporate Practice and Conduct was first issued in 1991 with further issues in 1993 and 1995
board structure and composition
appointment of non-executive directors
directors’ remuneration
risk management
financial reporting and auditing
conflicts of interest
the role of the company secretary
2003 the ASX Corporate Governance Council issued the Principles of Good Corporate Governance and Best Practice Recommendations
10 CORE PRINCIPLES
Make timely and balanced disclosure—
promote timely and balanced disclosure of all material matters concerning the company
2 Recommendations to support this principle
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, including explanation from any departures
The concept of balance requires disclosure of both positive and negative information
Respect the rights of shareholders—
respect the rights of shareholders and facilitate the effective exercise of those rights
2 Recommendations to support this principle
The company should design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings
The company should request the external auditor to attend the AGM and to be available to answer shareholder questions about the conduct of the audit, and preparation and content of the auditor’s report
Safeguard integrity in financial reporting—
have a structure to independently verify and safeguard the integrity of the company’s financial reporting
Recommendation to support this Principle
The CEO and the CFO (or their equivalents) should be required to state in writing to the board that the company’s financial reports present a true and fair view
The audit committee should be chaired by an independent chairperson who is not the chairperson of the board
The audit committee should have a formal charter
Information should be disclosed including the names and qualifications of those appointed to the audit committee, the number of meetings of the audit committee, and the names of those attending the meetings
Promote ethical and responsible decision-making—
actively promote ethical and responsible decision-making
3 Recommendations to support this principle
There should be a code of conduct to guide the directors, the CEO, the chief financial officer (CFO) and any other key executives in relation to practices necessary to maintain confidence in the company’s integrity, and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices
There should also be 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
Recognize and manage risk—
establish a sound system of risk oversight and management and internal control
3 Recommendations to support this principle
the board or appropriate board committee should establish policies on risk oversight and management
CEO and CFO (or equivalents) should state to the board in writing that they have made their statement about the integrity of the financial statements based on a sound system of risk management and internal control and compliance, and that that system is operating efficiently and effectively
explanations should be provided of any departures from the aforesaid best practice recommendations.
Structure the board to add value—
have a board of an effective composition, size, and commitment to discharge adequately its responsibilities and duties
5 recommendations support this principle
The majority of the board should be independent directors;
The chairperson should be an independent director;
The roles of chairperson and CEO should not be exercised by the same individual;
The board should establish a nomination committee;
Various information relating to the directors—including their skills, experience and expertise—and the names of the members of the nomination committee and their attendance at the meetings thereof, should be included in the corporate governance section of the company’s annual report.
Remunerate fairly and responsibly—ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to corporate and individual performance is defined
5 Recommendations to support this principle
disclosure should be provided of the company’s remuneration policies to enable investors to understand the costs and benefits of those policies, and the link between remuneration and corporate performance
the board should establish a remuneration committee
there should be a clear distinction between the structure of non-executive directors’ remuneration and that of executives (non-executive directors should receive fees but not options or bonus payments)
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, including the remuneration policies, and the names of the remuneration committee members and their attendance at meetings
Lay solid foundations for management and oversight—
recognize and publish the respective roles and responsibilities of board and management
One recommendation supports this principle—
Recommendation 1.1: to formalize and disclose the functions reserved to the board and those delegated to management
Recognize the legitimate interests of stakeholders—
recognize legal and other obligations to all legitimate stakeholders
One Recommendation supporting this principle
companies should establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders
Encourage enhanced performance—
fairly review and actively encourage enhanced board and management effectiveness
One supporting recommendation
that there should be disclosure of the process for performance evaluation of the board, its committees and individual directors, and key executives