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Corporate Governance

Exposure Draft 30 September 2004

Companies Update October 2004

 

Companies Update
15 February 2005
Update no 01/05

Important information for ASX Listed Companies

Financial Reporting - Rule amendment proposals

An Exposure Draft of a small package of rule amendments dealing with financial reporting matters subsequent to the introduction of the Enhanced Disclosure package in January 2003 has been prepared and will be released very shortly. The amendments also include changes in basis and reporting requirements introduced by the adoption of IFRS and are intended to rationalise the reporting requirements of listing rule 19.12, specifically the definition of "net tangible asset backing". ASX will notify companies when the Exposure Draft is posted on the ASX website. ASX intends that these rule amendments will take effect at the same time as the package of rules exposed in September 2004.

Proposed Listing Rule amendments - Change of implementation Date

The Exposure Draft of proposed Listing Rule amendments (PDF 484KB) released on 30 September 2004 indicated an implementation date of 1 March 2005. The proposals included amendments relating to the following:

  •  Review of the framework governing debt listings.
  •  Chairman's open proxies.
  •  Issue of securities to related parties.

ASX considers it preferable for practical reasons that both packages of amendments are implemented at the same time. Accordingly, it is now expected that the implementation date for both rule amendments packages will be in May. A further update regarding timing will be provided to companies in late March/early April.

Corporate Governance Reporting - Guidance for companies using alternative practices

Under listing rule 4.10.3, companies must disclose in their annual reports the extent to which they have adopted the Recommendations of the ASX Corporate Governance Council. Where a company has adopted alternative governance practices, it must disclose its reasons for doing so. Companies currently preparing their annual reports may find the recent report of the Implementation Review Group (IRG) on exception reporting provides useful guidance. The IRG does not comment on the requirements of the rule, but what they believe constitutes effective disclosure for corporate governance reporting purposes.

The report includes examples that may be used as a guide to the processes involved in formulating disclosure which is relevant to the company and thus accurately reflects the company's circumstances. The examples given in the report are not a template and should not be copied.

The IRG describes good exception reporting as incorporating 3 elements.

  • Describing how the company's approach is different from the relevant Recommendation.
  • The reasons for the company adopting a particular approach, and how its approach is consistent with the intent of the relevant Principle.
  • An explanation of how the company understands the relevant issues and has considered the impact of its alternative practices in terms of those issues.

The IRG notes the following:

Australian listed companies are encouraged to embrace Australia's flexible governance reporting regime, including the effective disclosure of differences from the non-compulsory Recommendations.

The disclosure examples and report are available on Implementation Review Group Report.

For more information please contact your Companies Adviser or email corporate.governance@asx.com.au.

AIFRS - Reminder

Companies will be aware that for reporting periods beginning on or after 1 January 2005, Australian incorporated entities are required under the Corporations Act to apply Australian equivalents to International Financial Reporting Standards (AIFRS).

The Australian Accounting Standards Board has issued Australian Accounting Standard 1047 'Disclosing the Impacts of Adopting Australian Equivalents to International Financial Reporting Standards' which deals with the disclosures required in periodic reporting during the transitional period leading up to a company's adoption of AIFRS.

ASX has issued a series of Updates over time which outline the continuous disclosure implications of reporting the effects on an entity of adoption of AIFRS. 

Companies are reminded that the continuous disclosure obligations of an entity are in addition to any periodic disclosure requirements of accounting standards or the Corporations Act.

ASX encourages all companies to refer to the October 2004 Companies Update. This also provides you with a link to earlier Updates issued by ASX.

The Updates also contain more general guidance on continuous disclosure and changes in accounting standards, which will be of assistance to foreign listed entities.

To help keep our Listed Entities informed of information and events ASX will be sending emails to the Company Secretary's Office from time to time. You are receiving this email because you have been identified as a key contact within the Company Secretary's Office at your organisation. If you would like to update your email address please do so via the Directors/Senior Management page on ASX Online for Companies. Feel free to forward this email to any relevant parties within your organisation.