As a whole, the latest amendments to the ASX Listing Rules, which took effect on 1 July 2014, have been made with simplicity in mind. According to ASX, the Listing Rules have been amended to afford greater flexibility to listed entities, to assist entities to meet their reporting obligations, and to ensure that shareholder votes are not excluded on a technicality (amongst other things).
Company secretaries should take care however to navigate carefully through the complexities that come with managing a simplified set of rules. We highlight below some of the key changes to be aware of, from a corporate governance perspective.
- Corporate Governance Reporting
Starting from their financial year commencing on or after 1 July 2014 (FY2015), ASX-listed entities that publish their corporate governance statements on their websites will have the option of specifying in their annual report the URL of the page on their website where their corporate governance statement can be found (URL Option), instead of setting out the statement in full in the annual report (Listing Rule 4.10.3).However, company secretaries should be aware that the entity’s corporate governance statement, if not included in the annual report, must nevertheless be lodged with ASX at the time of submitting the entity’s annual report (Listing Rule 4.7.4).
Further, company secretaries will need to ensure that the corporate governance statement, whether made available online or in the annual report:
is approved, and states that it has been approved, by the board of the entity. In this respect, the ASX recommends that entities adopt a process for obtaining approval, for example: pre-vetting by the audit committee? certification by the company secretary ? sign-off by external legal counsel ? final approval by the board;1 and
- specifies the date at which it is current, which must be a date on or after the balance date of the financial year in respect of which the statement is lodged with ASX and not more than 6 weeks before the relevant annual report is given to ASX (Listing Rule 4.10.3).
For entities that wish to adopt the ‘URL Option’ in respect of financial years commencing before 1 July 2014, the company secretary will need to ensure that the corporate governance statement reports against the Third Edition of the ASX Corporate Governance Principles and Recommendations, satisfies the above requirements and is lodged with ASX together with a completed Appendix 4G (see below) and the annual report (Listing Rule 4.7).
Entities adopting the URL Option should also map out the user experience to ensure that the corporate governance statement is easily accessible, whether as a PDF or a HTML web page.2
- New Appendix 4G
From FY2015 onwards, ASX-listed entities will also be required to complete and provide to ASX, at the time of submitting their annual report, the new Appendix 4G, which has been designed to assist readers in locating the governance disclosures made by the entity.
ASX has described Appendix 4G not to be as daunting as it looks. Instead, the Appendix 4G is likely to assist company secretaries to understand the entity’s governance disclosure requirements and verify that the entity is meeting each of them.3
- Form of the Proxy Form
Following feedback that the requirement to tick the ‘chairman’s box’ in a proxy form is often overlooked by security-holders – with the result that their votes are not taken into account on certain resolutions – the requirement has been removed in its entirety from Listing Rule 14.2.4
This is indeed a welcome change. However, the amendment ignores that, under the Corporations Act, the chair of a meeting (if a member of the key management personnel of the entity) is restricted from voting, in his/her capacity as a proxy, on resolutions concerning the remuneration of any key management personnel of the entity, unless his/her appointment “expressly authorises” the chair to exercise the proxy in those circumstances.5
The implication? Company secretaries will need to prepare two types of proxy form going forward: one without a ‘chairman’s box’ to be used for general purposes, and another with a ‘chairman’s box’ to be used where the express authority of security-holders is required to enable the chair to exercise proxies on a ‘remuneration resolution’ of the type described above.
- Closing Comment
The above changes are not necessarily difficult to implement. However, they can be fiddly and time consuming. Company secretaries should take the time to map out how the entity’s corporate governance reporting obligations have changed and establish appropriate procedures to ensure that all of the requirements (new and old) are met.