Corporate Governance requirements and monitoring

Good corporate governance – the system by which companies are directed and managed – is inextricably linked to market integrity.  ASX had a leading role in the formation of the ASX Corporate Governance Council, which developed a set of guidelines - Corporate Governance Principles and Recommendations - which articulates 10 core principles that the Council believes underlie good corporate governance.  ASX also has introduced Listing Rule requirements that relate to the guidelines.

    Listing Rule requirements and Corporate Governance monitoring

    The Listing Rules contain two requirements relating to Corporate Governance and to the ASX Corporate Governance Principles and Recommendations (Guidelines).  These are as follows:

    • ASX Listing Rule 4.10.3 requires listed entities to disclose in each annual report the extent to which they have followed the Guidelines during the reporting period.
    • ASX Listing Rule 12.7 requires the top 500 listed entities to have an audit committee, and the top 300 to have an audit committee that is composed in accordance with Recommendation 4.3 of the Guidelines.

    ASX has a Corporate Governance Review team to review annual reports for compliance with Listing Rules 4.10.3 and 12.7.

    In relation to monitoring compliance, and consistent with the principles underlying the Guidelines, the approach of Issuers Unit is to guide and educate listed entities about their corporate governance reporting.  In a number of instances, it has been recommended that entities attend education sessions specifically designed to clarify and assist with reporting obligations.  Clearly, where disclosure is deficient, the entity is required to make further or clarifying disclosure. 

    Where entities have breached Listing Rule 12.7, they have been given an appropriate time period to rectify the breach.  The fact of the breach and the time frame to remedy the breach are also required to be disclosed to the market.