The idea behind the corporate governance task force is the understanding of the impact that governance can have impact investor value, market integrity, and capital markets.
At this week’s Market Integrity Meeting, Dr. Sunita Sah addressed the two-year project based on funding that ASIC received in August for their corporate governance task force.
She also emphasised that there is collaboration between the conduct regulator and the Australia Prudential Regulation Authority (APRA).
“So, essentially what we are planning on doing is going and having look at the governance practices of large listed entities, so we could really inform everyone, ourselves included, on which of the practices we see to be good, which we see requires some improvement and provide some messaging where we can see that improvement taking place,” Sah explained
She said that the ASIC concluded that this something they needed to have closer look at because this can have an impact on the attractiveness of the capital markets.
They will be looking at the roles of the board and they will be looking at the oversight of non-financial risk.
“We are going to look at things like, how are boards informing themselves in relation to these particular matters? How are they in a position to actually know that they can ask the right questions? How do they know what they don’t know; what they are not being told? How do they know that their compliance and risk function is being adequately funded?”
She added that there will be a focus on executive remuneration.
Are your policies lived?
Another focus will be on disclosures. Dr. Sah explained that in the ASIC submission to the ASX corporate governance councils for the revised corporate governance, and the regulator indicated that they wanted to see the actual corporate governance of entities being disclosed in corporate governance statements as opposed to ‘aspirational’ policies or corporate governance practices.
“One of the things that we are going to be looking at as part of this process is looking at what the actual practices of an entity and looking at how that compares with the policies and the frameworks that are disclosed in the periodic reporting,” Sah said.
This report will then end recommendations on what best practice for corporate governance.