Commission finds encouraging practices

News release

1 September 2009

Commission finds encouraging practices in corporate governance disclosures

The Securities Commission was encouraged by the findings of its latest review of corporate governance reporting. Many issuers are providing transparent and relevant disclosures of their corporate governance policies, procedures and practices.

Many companies with a June balance date will be preparing their annual reports. Our findings may assist in the review of disclosures to ensure that companies understand the level of disclosure we expect to be made so shareholders can have comfort that their Boards and elected representatives are implementing best practice.

Research indicates investors are prepared to pay a premium for high standards of corporate governance so it is in the interests of listed companies to fully disclose the policies and practices of their Boards.

The Commission found that many entities clearly disclosed:
• remuneration policies for directors and executives
• the independence, expertise and experience of board members
• processes for ensuring the quality and independence of external auditors
• risk management policies and practices.

Areas where issuers can improve their disclosures relate to how boards:
• observe and foster high ethical standards, for example, compliance with a code of ethics
• build constructive relationships with shareholders
• consider and respect the interests of stakeholders.

The Commission notes that adopting its principles as a format for reporting can add to the clarity of disclosures. The Warehouse Group Limited’s disclosures are a good illustration of this.

The Commission found that some issuers who are subsidiaries of overseas listed entities provided limited or no corporate governance disclosures. The Commission expects these issuers to improve their disclosures.
The review involved assessing annual report and website disclosures of 24 selected issuers against nine principles covering the core elements of good corporate governance. The principles are set out in a corporate governance handbook for directors, executives and advisers, published by the Commission in 2004.

The Commission will publish a more detailed report of its findings after concluding its next review of disclosures.

Ends.

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