The ASX Corporate Guidance Council is set to publicly launch the final version of the third edition of its Corporate Governance Principles and Recommendations on 27 March.
In a recent video discussion with her colleagues Lizzie Knight and Andrew Lumsden on the subject, Corrs Chambers Westgarth partner Stephanie Daveson said there is nothing wrong with the existing governance framework.
“The only real reason given for the changes was following on from the [global financial crisis],” she said.
Certain jurisdictions in the US had “very prescriptive” forms of governance during the GFC and suffered as a result, said Ms Daveson.
“It seems that pressures have been put on Australia, as a result of the failure overseas, to readdress its governance principles,” she said.
Mr Lumsden said while he was “fully in favour of continuous improvement”, the proposed governance rules seem like “change for its own sake”.
“There doesn’t seem to be any burning platform for change here. A lot of the changes are tweaking and don’t seem to have a clear purpose in mind,” he said.
The Corporate Guidance Council was established to provide a forum for the ASX to “test out government ideas” and is an “amalgam” of various representative groups , said Mr Lumsden.
But he questioned the wisdom of having a standing committee overseeing corporate governance, arguing that a periodic review (similar to the current Financial Service Inquiry) would be more appropriate.
Mr Lumsden was particularly opposed to the move away from the ‘if not, why not’ model of corporate governance proposed in the upcoming principles.
Ms Daveson said the new principles mainly focus on director remuneration, risk (off the back of the GFC), and changes to the way companies interact with directors.
“For example, there is a proposal that all trading on market on behalf of employees on including directors has to be disclosed,” she said.
But there is no evidence that such a disclosure would be useful for market participants, said Ms Daveson – especially since shareholders have already sanctioned the execution of such plans.
Such changes are “regulation for regulation’s sake”, she said.
