ASX Corporate Governance Council

The ASX Corporate Governance Council (Council) brings together 21 business, investment and shareholder groups to oversee the principles‑based and industry wide framework it developed for corporate governance – the Corporate Governance Principles and Recommendations (Principles and Recommendations).

The Council was formed in 2002 and has been chaired by the ASX Group since its inception.  The Council’s diverse membership and its modus operandi of striving for consensus facilitates maintaining balance in the regulatory and reporting affairs associated with the Principles and Recommendations.

The overriding objective of the Council is to ensure that the Principles and Recommendations remain relevant and continue to provide a practical guide for listed companies, their investors and the wider Australian community on good corporate governance practices. 

2011 Review of the Principles and Recommendations

The Council undertook a review of the Principles and Recommendations in the first half of 2011 to ascertain whether any systemic corporate governance problems had emerged warranting revisions to the Principles and Recommendations. The Council heard consistently from stakeholders during the review process that there were no systemic problems warranting revision and that the existing Principles and Recommendations remain relevant to large and small companies alike.  As such, the Council is not proposing further revisions or the publication of a third edition of the Principles and Recommendations, at this stage.  Further information on the outcomes of the Council’s recent review and targeted consultations on the Principles and Recommendations is available here.

2010 Amendments to the Principles and Recommendations

The Council released the most recent revisions to the Principles and Recommendations on 30 June 2010.  The Corporate Governance Principles and Recommendations with 2010 Amendments became effective on 1 January 2011.  A marked-up version of the recent revisions to the 2nd edition of the Corporate Governance Principles and Recommendations with 2010 Amendments is available here.

"If Not, Why Not" Approach

The Principles and Recommendations are not prescriptive.  If a listed company considers that a particular Recommendation is inappropriate to its particular circumstances, it has the flexibility not to adopt it, but this flexibility is tempered by a requirement to explain why the Recommendation has not been followed – the “if not, why not” approach. 

ASX Listing Rule Requirements

Under Listing Rule 4.10.3, listed companies are required to provide a statement in their annual report disclosing the extent to which they have followed the Recommendations in the reporting period.  Where companies have not followed all of the Recommendations, they must identify the Recommendations that have not been followed and give reasons for not following them. 

Importantly, the reporting requirements under the Listing Rules provide for transparency with respect to the corporate governance practices of listed companies that better position investors to make informed investment decisions.  Ultimately, it is for the market to assess the corporate governance practices of Australian companies, not the Council or ASX.

More detail about the ASX Corporate Governance Council is available at: http://www.asx.com.au/corporate_governance