Legal Insights

Are you up to date? 30 June deadline for corporate governance policies is looming

By Rosamond Sayer

• 21 May 2020 • 5 min read

ASX listed companies with a 30 June balance date to update their corporate governance policies by 30 June 2020

As you are no doubt aware, the ASX Corporate Governance Council released its revised fourth edition of the ASX Corporate Governance Principles and Recommendations (Corporate Governance Principles) in July 2019. The changes take effect from a listed entity’s first full financial year commencing on or after 1 January 2020. Entities with a 30 June balance date will be expected to benchmark their governance practices with the fourth edition commencing next financial year (i.e. on and from 1 July 2020), while entities with a 31 December balance date will be required to do so commencing the current financial year (ie. on and from 1 January 2020).

As such, this is a timely reminder for those ASX listed entities with a 30 June balance date to ensure their corporate governance policies and charters have been updated and new policies put in place by 30 June 2020.

The new edition of the Corporate Governance Principles recommends the adoption of two new policies: a Whistleblower Policy and an Anti-Bribery and Corruption Policy in addition to making new recommendations that will require changes to a company’s existing corporate governance policies and charters in order to comply. It should also be noted that recent amendments to the Corporations Act 2001 (Cth) required Australian incorporated listed companies to adopt the Whistleblower Policy by 1 January 2020.

As is the case with all of the Corporate Governance Principles, these are not mandatory but if you do not comply with a particular recommendation, you need to report against it on an 'if not, why not' basis.

For companies with a 31 December balance date, such updates and new policies should have been adopted no later than 31 December 2019, however, to the extent this was not done, the company will need to report against the revised Corporate Governance Principles noting the period during which, and the extent to which, it did not comply and why not.

The table below sets out some of the key updates to a listed entity’s suite of corporate governance policies to bring them in line with the fourth edition of the Corporate Governance Principles.

Recommendation

Detail

Articulate statement of values

The company will articulate and disclose its values with these to be expressed in or cross referenced in the code of conduct.

Whistleblower Policy

A listed entity should have and disclose a whistleblower policy that encourages employees to come forward with concerns that the entity is not acting lawfully, ethically or in a socially responsible manner and provides suitable protections if they do so. This is in line with the recent changes to the Corporations Act which require that public companies and large proprietary companies must have a whistleblower policy which contains the content prescribed in the Corporations Act which must be in place by 1 January 2020.

Anti-bribery and Corruption Policy

A listed entity should have and disclose an anti-bribery and corruption policy. From the Corporate Governance Council’s perspective, the policy can be standalone or form part of its code of conduct. Whether the policy is standalone or forms part of the code of conduct, entities should ensure that the policy includes the Council’s recommended content.

Diversity Policy disclosures

If the entity was in the S&P / ASX 300 index at the commencement of the reporting period, the measurable objective for achieving gender diversity in the composition of its Board should be to have not less than 30% of its directors of each gender within a specified period. The Diversity Policy must now be disclosed.

Procedures in place to identify new and emerging sources of risk

Audit and Risk Committee Charter and Risk Management Policy to be updated to ensure there are procedures in place to identify and report on new and emerging risks, such as, the applicable Committee receiving reports from management on new and emerging sources of risk and the risk controls and mitigation measures that management put in place to deal with those risks.

Process to verify unaudited reports

The Company must have and disclose a process to verify the integrity of their annual directors’ report and other unaudited reports.

It should also be noted, due to COVID-19 restrictions, ASIC has further extended the deadlines for both listed and unlisted entities to lodge certain financial reports under Chapter 2M and 7 of the Corporations Act 2001 by one month for certain balance dates up to and including 7 July 2020 (which now includes a 30 June 2020 balance date) and where the reporting deadline for those reports has not already passed. Listed entities will be required to inform the market when they rely on the extended period for lodgement and entities should consider providing reasons for relying on the extended deadlines in the market announcement. However, listed entities should note that this does not change the deadline for the release of their Appendix 4E Preliminary Final Results, which remains as 31 August for companies with a 30 June year end.

Require assistance on ensuring you're up to date?

We can assist with updating any corporate governance policies and charters, either on an individual basis or the whole suite and can provide a new Whistleblower Policy and Anti-Bribery and Corruption Policy.

By Rosamond Sayer

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