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The latest review by the Australian Securities Exchange (ASX) of reporting against the ASX Corporate Governance Council’s Principles and Recommendations shows that listed entities, both companies and trusts, continue to improve their corporate governance reporting.
ASX reviewed the FY07 annual reports of 1,291 listed entities that reported with a 30 June balance date. This represented approximately 67% of all listed entities at the time.
Overall reporting levels – the aggregate of adoption of recommended practices and of ‘if not, why not’ reporting – rose slightly in 2007 to 90.5%, up from 90% last year. This is the highest level since ASX began the annual review in 2004. For the top-500 listed entities the overall reporting level was 94%. The overall reporting level for listed trusts was 93%, up from 85% last year.
The number of Recommendations with overall reporting levels over 80% increased to 26 out of 28 Recommendations. In 2006 it was 23 out of 28. Among top-500 listed entities all 28 Recommendations achieved reporting levels of over 80%. For listed trusts 27 out of 28 Recommendations achieved reporting levels over 80%.
Eric Mayne, Chair of the ASX Corporate Council and Chief Supervision Officer of ASX, said: “Investors are more informed than ever before about the corporate governance practices of listed entities. And entities themselves are increasingly aware of the importance of being transparent with their governance arrangements.
“Overall reporting levels have continued to rise over four successive years, highlighting the desirability of Australia’s flexible, principle-based approach to corporate governance. The improvement among trusts reflects the effectiveness of ASX’s targeted education and monitoring programs.
“Good corporate governance is not restricted to adopting the Recommendations. It can also exist where entities use ‘if not why not’ reporting; that is, where entities identify the Recommendations they have not followed, explain why they have not followed them, and explain how their practices accord with the spirit of the relevant Principle. “The ‘if not why not’ mechanism enables entities to explain to the market the governance practices they consider appropriate to their circumstances.
“Disclosure is the key. The more transparent listed entities are about their corporate governance practices, the better placed investors will be to make informed investment decisions.
“The Principles must remain relevant to the Australian business and investment communities. With this in mind the ASX Corporate Governance Council carried out a review of, and broad public consultation on changes to, the Principles during 2006 and 2007. The revised Corporate Governance Principles and Recommendations that came into effect on 1 January 2008 are a further step in the evolution of corporate governance in Australia.”
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