The ASX Corporate Governance Council proposes new recommendations under its Corporate Governance Principles and Recommendations requiring a listed company on an "if not why not" basis to:

  • establish a diversity policy that includes measurable objectives relating to gender as set by the board of the company and disclose it to the market in full or in summary
  • disclose in its annual report its achievement against the gender objectives set by the board
  • disclose in its annual report the proportion of women employees in the whole organisation, in senior management and on the board.

There are also changes that will be made to the commentary for the existing Recommendation 2.4 dealing with the establishment of a board nomination committee. The commentary is aimed at providing guidance to listed companies and will encourage the nomination committees of listed companies to include in their charters a requirement to continuously review the proportion of women at all levels in the company. Commentary will also highlight the responsibility of the nomination committee to address strategies on board gender diversity and diversity in general.

There will also be changes to the commentary for the existing Recommendation 2.5 (dealing with disclosure of the process for evaluating board performance) requiring that the performance review of the board include consideration of diversity criteria in addition to skills. Boards will be required to disclose what skills and diversity criteria is sought in any new board appointment.

Implications

The changes will compel listed companies to pursue diversity at all levels within the organisation and adopt and disclose appropriate gender objectives and policy.

Gender diversity will become an important issue for boards of listed companies and will require companies to focus on developing diversity policy with measurable objectives relating to gender in the next 6 months.

Companies should commence the process for establishing an appropriate policy and objectives that can be measured and against which company achievements may be reported annually as soon as possible.

Other Proposals

There are also proposals to:

  • improve listed companies' record keeping of analyst briefings, by providing guidance that companies keep a summary of topics discussed at group briefings with investors and analysts (including a list of persons present, and the time and place of the meeting), give advance notice of group briefings and make them widely accessible; and
  • elevating the guidance on the composition of a remuneration committee, with a majority of independent directors, chaired by an independent director and have at least 3 members, to a recommendation, requiring companies to report on an "if not why not" basis.

What's Next

The ASX Corporate Governance Council expects to issue an exposure draft of the proposed changes for public consultation in early 2010 with the changes anticipated to be implemented on 1 July 2010.