After an extensive consultation process, the third edition of the ASX Corporate Governance Council Principles and Recommendations (Principles and Recommendations) was released by the ASX Corporate Governance Council on 27 March 2014. Listed entities will be required to report against the third edition Principles and Recommendations – on an ‘if not, why not’ basis’ – for financial years commencing on or after 1 July 2014.
The key amendment to the Principles and Recommendations has been the introduction of nine ‘new’ substantive Recommendations, including for director background checks, director induction and development, accountability of the company secretary, disclosure of internal audit or alternative internal controls and disclosure of material economic, environmental and social sustainability risks and how they are managed.
Many of the new Recommendations were captured in the commentary of the second edition Principles and Recommendations. Their elevation to Recommendations means that the company is now required to report against them.
Other important changes include the expansion of the list of factors which are to be considered when assessing director independence (including tenure factors) and clarifications of the diversity reporting obligations.
You can read our update on the third edition of the Principles and Recommendations in the May 2014 edition of Acumen.