Submission to the ASA in response to its 2013 Policy Discussion Paper

  • Date:10 Sep 2013
  • Type:Policy submission

On 10 September 2013, we made a submission to the Australian Shareholders' Association (ASA) in response to its 2013 Policy Discussion Paper.

The Discussion Paper is intended to form the basis of the ASA’s monitoring activities of ASX listed companies with respect to their governance practices during the upcoming reporting season. However, on reading the discussion paper, for the most part the policy positions outlined in the paper set rigid standards that define, for all parties, what constitutes good governance and the roles of companies, boards and directors.

In our submission, we expressed that while we have no issue with the ASA providing guidance or advice to its membership, Company Directors strongly supports a “principles based” approach to corporate governance and does not support the mandating of corporate governance practices.

The majority of the policy positions taken by the ASA in their Discussion Paper are, in our opinion, overly-prescriptive and inflexible which is inconsistent with the widely accepted view that there is no “one size fits all” when it comes to corporate governance. It also fails to recognise the range in size and diversity of ASX listed companies. In many instances, the policy positions taken in the document are also out of step with what is widely considered to be good corporate practice in Australia.

Company Directors has long endorsed the “if not, why not” corporate governance reporting regime set up by ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles and Recommendations), which recognises the evolving nature of corporate governance and, as it expressly states, that there “is no single model of good corporate governance”.  

By taking a hard line on issues of corporate governance, the ASA risks making unreasonable voting decisions that do not take into account the particular company’s circumstances and, ultimately, this discourages shareholder engagement. Further, there is a high chance that the application of some of the ASA’s policies would in fact lead to the destruction of shareholder value rather than its enhancement.

While our objection to the overly-restrictive approach taken in the Policy Discussion Paper is relevant to most the policies, we have also made specific comments on the following specific policy areas:

• Composition of boards, director tenure and independence
• Election of executive directors
• Board committees
• Board audit committees
• Director equity holdings

Download the policy submission (PDF 2.34 MB).