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ASX Corporate Governance Council Unveils 5th Edition of Principles and Recommendations

The latest edition set to enhance governance frameworks to navigate emerging issues and regulatory requirements

 

The ASX Corporate Governance Council has released the draft fifth edition of its Principles and Recommendations for comment.

The Council states that this latest iteration of the guidelines is intended to address evolving investor and community expectations while enhancing governance frameworks to navigate emerging issues and regulatory requirements. The draft addresses various factors including corporate conduct, risk management, stakeholder relationships, reporting, and remuneration.

The new edition retains the eight fundamental principles, with refinements in expression, and includes 33 general recommendations alongside seven additional ones applicable in specific circumstances.

Among the key updates are provisions related to board skills and diversity disclosure, stakeholder engagement practices, non-executive directors’ remuneration structures, and provisions for clawing back performance-based executive pay.

The proposed Fifth Edition includes emphasised disclosure regarding code of conduct breaches and verification processes for periodic reports, along with assessing and disclosing material risks including ESG risks.

The Council’s Principles and Recommendations first released in 2003 to foster best practice governance, continues to be a key resource for listed entities for their governance practices.

Stakeholders are invited to provide feedback on the proposed changes before the submission deadline on May 6, 2024. The Governance Institute is preparing its response and is inviting members to get in touch with our Policy and Advocacy team at policy@governanceinstitute.com.au to have their say.

The Fifth Edition is slated for release in early 2025, potentially taking effect for financial years commencing on or after July 1, 2025, subject to further stakeholder consultation.

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