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The Department of Home Affairs has issued its draft guidance “Modern Slavery Act 2018: Draft Guidance for Reporting Entities” (Draft Guidance) for the new Modern Slavery Act 2018 (Cth) (the Act).
Welcome to Edition 62 of Boardroom Brief.
This is a service specifically targeted at the needs of busy non-executive directors. We aim to give you a “heads up” on the things that matter for NEDs in the week ahead – all in two minutes or less.
This week we have decided to dedicate Boardroom Brief to a review of the proposed fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations document. With the Hayne Royal Commission in full swing, we expect to see corporate governance and corporate culture issues front and centre in the financial media for some time.
ASX consults on new Corporate Governance Principles and Recommendations.
On 2 May 2018, the ASX Corporate Governance Council (Council) released a consultation paper on its proposed fourth edition of its Corporate Governance Principles and Recommendations (ASX Recommendations). This will be the first revision to the ASX Recommendations since 2014. Directors should note the Council’s comments that the proposals in part anticipate the findings of the Royal Commission and are aimed at “setting the tone from the top”, ensuring that boards are sufficiently informed to monitor the culture of their organisation. Submissions can be made until 27 July 2018. The final version of the updated ASX Recommendations will be confirmed in early 2019 and will take effect for a company’s first full financial year commencing on or after 1 July 2019.
The most notable proposal is the substantial revision of Recommendation 3, which places a much stronger emphasis on companies striving for the “desired” corporate culture. In particular, the Council’s proposals recommend companies: (i) disclose a “core value statement” (to be drafted by management, approved by the Board and consistently demonstrated by key leadership personnel); (ii) adopt an anti-bribery and corruption policy; and (iii) adopt a whistleblower policy. As noted in previous editions of Boardroom Brief, legislative reform on whistleblowing is currently before Parliament, and the proposed update to the ASX Recommendations in this regard aligns with the overarching obligations that will be placed on companies under these reforms. Directors should note the shift in focus within Recommendation 3; namely, for companies to now not only think about maximising shareholder value but also consider the society and environment within which they operate.
Other proposals of note include a recommendation that boards of S&P / ASX 300 companies set a board composition target of at least 30% of each gender and ensure voting on resolutions at meetings occurs by poll rather than a show of hands.
Directors should also be aware of the Council’s revisions relating to the Listing Rule 3.1 continuous disclosure requirements. In particular, the Council suggests that all announcements made under Listing Rule 3.1 are given to the board promptly after they are made and that investor presentations are given to ASX ahead of time, with consideration also given as to whether presentations should be livestreamed or a transcript or recording of them otherwise published.
While these are changes are evolutionary, rather than revolutionary, they do continue a trend towards a slightly more prescriptive approach by ASX in a number of areas. The suggestion that Boards take greater responsibility for driving a more “desirable” corporate culture, will mean that Directors need to heighten their focus on mechanisms by which this can actually be achieved. Failure to do so may increasingly have legal implications, and this is where “the rubber hits the road” in terms of directors’ duties.
JMEI application window closes on Wednesday. As previously reported in Boardroom Brief, Junior Explorers wishing to participate in the Junior Minerals Exploration Incentive (JMEI) for the 2017-2018 income year have until 16 May 2018 to lodge an application. Junior explorers considering a capital raise in the 2019 year should have their applications (and associated supporting working papers) ready ahead of the 1 June 2018 opening date for applications.