Saturday, 25 May 2013

Corporate Governance and The Directors

Corporate governance refers to the system by which corporations are directed and controlled.

A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors. It is often simply referred to as "the board".

The Australian Securities Exchange (ASX) Corporate Governance Council has developed Corporate Governance Principles for Australian listed entities. Companies listed on the ASX must comply with these Corporate Governance Principles on an ‘if not, why not’ basis. Although non-ASX listed companies are not required to comply with the ASX’s Corporate Governance Principles, they provide a useful framework for identifying those behaviours that are considered to be good corporate governance practices.

By Australian standards, a good corporate governance system would generally be expected to encompass the following characteristics:

  • A formalisation of the functions reserved to the board and those delegated to management.
  • A majority of the board would be independent directors. The chairperson would also be an independent director.
  • The chairperson and the Chief Executive Officer would not be the same person.
  • An established code of conduct for company officers.
  • An established trading policy for company officers.
  • An established audit committee.
  • Established policies for the oversight and management of material business risks.
  • An established remuneration policy for executives and non-executive directors.

Further details regarding corporate governance principles may be obtained from ASX’s website

The governance promotes disclosure, accountability and fairness. All large companies publish reports and have corporate govance schemes in place that adhere to these principals. 

•Public companies and ‘large’ proprietary companies must prepare annual financial reports - including financial statements and directors’ reports
•‘Small’ proprietary companies do not have these requirements unless requested by ASIC or by at least 5% of members
•To be ‘small’, they must satisfy at least 2 of:
Consolidated gross operating revenue < $25 million
Consolidated gross assets at end of year < $12.5 million
Must employ < 50 employees at end of year

Company name includes
‘Pty Ltd’
Public sale of shares
Typical size
Extent of regulation
Raise monies from public
Some restrictions
Subject to reporting requirements
Depends on size

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