ASX Corporate Governance Principles and Recommendations 4th Edition

07 May 2019

On 27 February 2019, the ASX Corporate Governance Council (Council) released the fourth edition of the ASX Corporate Governance Principles and Recommendations (Fourth Edition). The Council aims to provide a list of recommendations for listed entities to help with governance structures and reporting requirements.

The Fourth Edition maintains the ‘if not why not’ disclosure framework requiring ASX listed entities to comply with the recommendations or explain why they are not. The Fourth Edition continues to be based on the eight core principles that have been contained in previous editions. However the changes proposed by the Fourth Edition depict ASIC’s desire to improve corporate culture in Australia and the Council’s desire to ensure the principles and recommendations remain contemporary and relevant, including addressing emerging issues arising from the recently concluded Royal Commission into the Banking, Superannuation and Financial Services industries.

The Fourth Edition will take effect for financial years commencing on or after the 1 January 2020. Listed entities should commence considering the changes made under the Fourth Edition to ensure that their policies and practices align with the recommendations from commencement. Early adoption is recommended.

Although the requirement to address the principles and recommendations falls on ASX listed entities, they are widely considered to be the leading statement on corporate governance in Australia and influence governance practices across all sectors.

Overview of changes

The changes in the Fourth Edition have a clear emphasises on values, culture, risk and accountability.


The Council has acknowledged the importance of company values. Investors and the broader community expect a listed entity to act ethically and responsibly. A listed entity must ensure it proscribes a set of values and makes sure they are implemented across an entire organisation. Those values need to be tailored to the entity, taking into account employees, officers, customers and stakeholder behaviours.


The Council has placed greater importance on listed entities to strengthen their ethical policies. With recommendations now including whistleblower and anti-bribery policies, boards will need to reflect on whether these policies exist or, if not, should be adopted. In addition, the Council has made a clear statement that S&P/ASX 300 entities should have at least 30% gender diversity for their board within a specified period. These changes are off the back of a clear global movement for companies to be more socially responsible. Finally, to ascertain the true will of security holders attending and voting at meetings, conducting a poll, rather than a show of hands, is the most certain way of doing so and is encouraged.


The Council has placed more emphasis on entities considering and disclosing non-financial risks such as environmental and social risks. This change is sparked by the long term value commonly associated with managing environmental and socials risks. A split between financial and non-financial risks has been included for greater focus and transparency on the latter.


Finally, the Fourth Edition highlights the importance of accountability of an entity and, in particular, the accountability of its board. This is highlighted through new recommendations in voting procedures and disclosure of that entity’s documents. Moreover, the new recommendations place a greater emphasis on the board having timely visibility of the nature and quality of information being disclosed by the entity to the market. For example, investors are beginning to rely on periodic corporate reports instead of audited or externally reviewed reports. Where a report of this type is delivered to investors, entities should also indicate how they have verified the report so that it is materially accurate, balanced and provides investors with appropriate information.

New changes

The new recommendations set by the Council are as follows:

  • Recommendation 3.1 – Listed entities are to articulate and disclose their values;
  • Recommendation 3.3 – Listed entities should have and disclose whistleblower policies, and ensure that their boards or board committees are informed of any material concerns raised under their policies;
  • Recommendation 3.4 – Listed entities should have and disclose anti-bribery and corruption policies, and ensure that their boards or board committees are informed of material breaches of the policies;
  • Recommendation 4.3 – Listed entities should disclose their processes to verify the integrity of periodic corporate reports released to the market that are not audited or reviewed by their external auditor;
  • Recommendation 5.2 – Listed entities should ensure that their boards receive copies of all material market announcements promptly after they are made;
  • Recommendation 5.3 – Listed entities giving a new and substantive investor or analyst presentation should release copies of the presentation materials via ASX Market Announcements Platform in advance of the presentation;
  • Recommendation 6.4 – Listed entities should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands;
  • Recommendation 9.1 – Listed entities with a director who does not speak the language in which board or security holder meetings are held, or key corporate documents are written, should disclose the processes they have to ensure these directors understand and can contribute to meetings, and can discharge their obligations in relation to these documents; and
  • Recommendation 9.2 – Listed entities established outside Australia should ensure that security holder meetings are held at a reasonable place and time.

Furthermore, there were several significant changes to existing recommendations, including:

  • Recommendation 1.2 – Listed entities should undertake appropriate checks on senior executives, as well as directors, before engaging them;
  • Recommendation 1.5 – An entity in the S&P/ASX 300 should have a measureable objective of at least 30% of directors of each gender;
  • Box 2.3 – Factors in assessing the independence of a director has been amended to include receiving performance based remuneration;
  • Recommendation 3.2 – The board or committee of the board of a listed entity should be informed of any material breaches of the entity’s code of conduct;
  • Recommendation 7.2 – Greater emphasis placed on the board of a listed entity being satisfied that the entity is operating with due regard to the risk appetite set by the board; and
  • Recommendation 7.4 – Entities will only be asked to disclose whether they have material exposure to environmental or social risks and have removed disclosure for economic risks.

A full copy of the Fourth Edition can be sourced here.


The Council’s emphasis on culture across an entire organisation depicts a global shift for companies to be more accountable and socially responsible. The importance for organisations to act ethically has never been greater and companies must ensure they are compliant with the bare minimum standards set out in the Fourth Edition or explain why not.

Please contact our Corporate Governance team if you have any questions in regard to the Fourth Edition or if your organisation requires assistance in addressing its recommendations.

This article was written by Sam Dwyer, Partner and Kris Paltoglou, Law Graduate.

Sam Dwyer

P: +61 3 8644 3558


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