Are your corporate governance practices up to scratch? With good governance and board evaluations coming to the fore, ASX has updated ASX Listing Rules Guidance Note 9 Disclosure of Corporate Governance Practices (GN9). The new rules come into effect on 1 January 2020 alongside the fourth edition of the Corporate Governance Principles and Recommendations.
Guidance Note 9 updates guidance on disclosure of corporate governance policies, including the requirement for a listed entity to have and disclose in its annual report the following:
- Board charter describing board and management roles and responsibilities
- Board skills matrix describing the board’s current and desired skills
- List of independent directors
- Disclosure of directors’ interests, positions of relationships (per Box 2.3 of the Principles and Recommendations) and why they do not compromise the director’s independence
- Corporate values
- Diversity policy specifying measurable objectives and progress towards them
- Code of conduct
- Whistleblower policy
- Anti-bribery and corruption policy
- Continuous disclosure policy
- Processes to ensure directors who do not speak the language used by the board can understand and contribute to proceedings, and discharge their responsibilities
The goal is to encourage a positive approach to disclosure and enhance public, stakeholder and regulator trust. Thanks to ‘24/7’ online news services, social media and increased public interest in businesses and their values, trust is a vital commodity for all companies.
Thus, a company’s ‘social license’ is increasingly understood as critical to its ability to operate with public support and without protest, boycott or other resistance; stakeholders are questioning business practices that may clash with their values and regulators are increasing their vigilance and propensity to investigate potential breaches.
Modern Governance: the toolkit you need
These are essentially questions of governance, and modern boardrooms – and businesses – need Modern Governance. ‘Modern Governance’ refers to the practice of installing a unified software platform to facilitate and simplify all aspects of corporate governance and board reporting. Functions include secure messaging and document sharing, voting, preparing and distributing board papers, reporting on audit and compliance, and data analytics to enhance business intelligence.
In the case of the updates to GN9, Modern Governance automates much of the information-gathering and report creation required for compliance. It simplifies the Company Secretary’s role, as well as other risk and compliance officers’ roles. Time saved on routine tasks, combined with access to business intelligence from the Modern Governance platform, enhances their ability to focus on strategic, value-adding tasks.
GN9: further notes
In addition to the ‘headline’ changes noted above, the amendments to GN9 include further guidance relating to key provisions:
- Appendix 4G: completing an Appendix 4G
- Section 10: disclosing governance policies
- Section 11: diversity policies and measurable targets
- Section 14: verifying reports not audited or reviewed by an external auditor
- Section 15: releasing copies of presentations for investors or analysts
- Section 17: policies regarding whether participants in equity-based remuneration schemes can enter into transactions that limit the risks of participating in the scheme
Is your governance modern enough?
To remain in compliance with the new requirements, we recommend conducting a board assessment and evaluating your governance processes – and implementing Modern Governance as a priority.
Not only will it help you comply with the changes in GN9, but it’ll also help your entire organisation. The board will be better prepared, governance and compliance and officers will be better equipped, and external stakeholders will be better informed.
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