The members voice AICD REVIEW

  • Date:01 Feb 2005
  • Type:CompanyDirectorMagazine
An outline of some of the issues addressed by AICD’s policy department, committees and taskforces over the past month follow:

The members' voice

An outline of some of the issues addressed by AICD's policy department, committees and taskforces over the past month follow:

Victorian OH&S Bill

The Victorian Occupational Health & Safety Bill was passed on 17 December. The AICD was gravely concerned at the Victorian Government's sudden introduction of the Occupational Health and Safety Bill into Parliament in November without any meaningful consultation with stakeholders.

The AICD has outlined its concerns regarding the Bill in a letter to the Victorian Attorney-General Rob Hulls, in a media release and in a combined stakeholder advertisement in The Age. There were amendments to the legislation while it was being debated. The AICD has formed a taskforce to review the final form of the legislation for its impact on company directors.

NSW OH&S Legislation Amendment

AICD endorsed the NSW Minerals Council submission dated 12 November with other stakeholders which identified concerns with the Occupational Health & Safety Legislation Amendment (Workplace Fatalities) Bill 2004.

Concerns include the process for prosecution of offences and the failure to recognise employer and employee joint responsibilities for workplace safety. AICD continues to liaise with NSW Minerals Council and other employer groups such as Australian Business Limited. AICD has established a taskforce to finesse our position on the Bill and will be closely monitoring developments before Parliament resumes in February.

Business Coalition for Tax Reform

The coalition (of which AICD is a founding member) held its last meeting on 15 December 2004. Among its recent activities are:

  • A submission to the Review of Self-Assessment
  • Developing an extensive report on state and territory business transaction taxes
  • Preparing a paper on reform of personal tax. The paper is still in draft
  • Preparing a submission on issues to be addressed in the 2005/2006 Federal Budget.

Corporate governance links

John Ralph, chairman of the AICD's Corporate Governance Committee, attended the December meeting of the ASX Corporate Governance Council to hear how the ASX principles are being implemented.

Karen Hamilton, the former chair of ASXCGC also attended a meeting of the AICD Committee to discuss implementation of the principles.

According to ASX'S review of 2004 Annual Report disclosures, the reaction from business to imple-mentation of the principles has been mixed although there is general acceptance of the principles themselves.

Some companies are adopting a "tick-a-box" approach to compliance with the principles, despite the ASX's stated aim of avoiding prescription.

The ASX is more interested in the quality of the disclosure of information and does not want to impose additional regulatory costs on business. Its initial review of implementation indicates that company size was a key driver of responsiveness to the principles, with smaller companies indicating exceptions more frequently on issues of director independence, nomination committees and the separation of roles for chairman and CEO.

The ASX has also set up the Implementation Review Group to monitor feedback and assist companies with their reporting. AICD committee member, Graham Bradley is also a member of the IRG. The IRG will produce for the ASX council a suite of guidance/examples of good and bad disclosure practices. These are intended to guide companies through the "if not, why not" approach outlined in the principles rather than specify "best practice" requirements.

At this stage, there is no timetable for re-issue or review of the principles at this stage.

Electronic Communication

The ASX Corporate Governance Council has formed a working group, to examine and develop guidelines for electronic communication between companies and their stakeholders. The working group has met twice and aims to develop non-prescriptive guidance for companies.

Corporate governance of state-owned enterprises

The OECD has issued draft guidelines for state-owned enterprises.

The rationale for the guidelines is that while a number of OECD countries underwent extensive privatisation programs in the 1980s and 1990s, state-owned enterprises are likely to remain important in a number of these countries. The OECD believes that the governance of these entities will be critical in ensuring efficiency and competitiveness of the economies concerned. The guidelines are intended to be non-binding.

Multiple directorships

The ASA sent a letter to the chairmen of the top 150 companies in late December 2004, seeking suggestions for how retail investors might best judge whether or not an individual non-executive director is over-committed, as an alternative to setting limits on multiple directorships.

The ASA's current and controversial policy is to vote against directors standing for election if they hold more than five directorships of listed companies.

A chairman's workload is considered by the ASA to be equivalent to three directorships. The AICD Corporate Governance Council has in train research designed to collect aggregated statistical data on the actual number of multiple directorships held by non-executive directors and chairmen.

A second study will explore these issues in more detail by interviewing directors and chairmen with multiple board positions to assess the influence of personal style and variations between companies and different boards. This aims to demonstrate the extent of variations between people, companies and boards and hence the inappropriateness of setting arbitrary numerical limits.

The AICD's alternative to numerical limits is more effective evaluation and disclosure of workload information at the time of re-election. The AICD has and will continue to discuss this issue with the ASA.

Members' feedback

All AICD policies and submissions can be found at www.companydirectors.com.au under Policy and Advocacy.

If you wish to provide feedback, obtain further information or permission to reproduce this material please contact Rob Elliott, general counsel, manager policy and advocacy at relliott@companydirectors.com.au

FAQ of the month

Do motions have to be moved and seconded in a board meeting?

Unless it is specifically required in an organisation's rules, there is no legal or statutory requirement for a motion to be seconded before it can be discussed.

Some boards prefer to conduct meetings in a collegiate fashion where consensus rather than formal motions and voting occur. In this case minutes may record "Resolved" rather than "Proposed by/carried". This still allows for objections by individual directors to be recorded.

Disclaimer

The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.