The launch of the ASX Corporate Governance Council guidelines in March this year was received with mixed feelings in the business community. Now that the reporting year for the ‘if not why not’ has commenced, it’s important to gauge how they are working in real life and what is in involved in complying with them.

For listed companies the task of assessing the degree of compliance must occur at the beginning of the year in order to gauge the work to be done.

1. How much has your organisation assessed the degree to which it complies with the guidelines so far? (please put a cross by one)

Extensively 67%
Reasonably 33%
Minimally

Comment:

Full review of current v proposed practice with implementation of (minor) changes to get to ASX BPCG.
We also have to deal with Sarbanes Oxley in the USA.
Reasonably — we have for some time satisfied the major principles e.g. majority independent directors, independent audit committee, independent OH&S and Environmental Committee, disclosure of potential conflicts of interest etc. We are still drafting the suite of internal documents required by the Guidelines for review and approval by the Audit Committee and the Main Board at the next meeting.
Audit undertaken both internally and via external auditors.
Gap analysis completed.
Principles nearly all written but yet to receive Director Approval.

2.
a) Does your organisation fully comply with the guidelines at the current time?

Yes 24%
No 64%
Mostly 12%

b) If not do you plan to increase your level of compliance with the guidelines?

Yes 97%
No 3%

Comment:

Areas of non-compliance are not material — changes required are only superficial (eg formalising policies, charters etc and putting them on website).
In some but not all cases.
Only minor modifications required — generally more disclosure of policies on web site.
Increase in the level of compliance will mainly involve formalising existing policies and procedures to satisfy the obligation to disclose internal documents required under the Guidelines.
We comply with the intent of almost all but not the detailed guidelines. Many of these are inappropriate.
Compliance with the guidelines is going to require ongoing monitoring to ensure that the spirit, and not just the letter, is adhered.
Level of compliance will be assessed on an ongoing basis having regard to the general reaction to the Guidelines within the market place.

c) What timeframe do you expect this to be done in?

Next 6 months 57%
Next year 37%
Next two years 6%

3. Are there any areas in which your company may not comply and will be explaining why not?

Yes 55%

Please specify

We have developed a definition of independence based on the guidelines and will give information about that.
Board structure re independent non-executive director
Various best practice recommendations.
Non-comply with 2.1, 2.2, 8.1 and 9.1
Majority of directors will not be independent — will be 4 to 4.
We do not have a detailed prescriptive Risk Management practice and procedure document.
The Guidelines are not always appropriate. The definition of Independent Director is not acceptable.
Possibly in relation to the sign-off by CEO and CFO on the adequacy of policies and procedures for risk assessment.
Materiality thresholds and term of office for directors, procedure for appointing new directors, procedure for managing material risk and adoption of a code of conduct. All of these issues are under review as part of our ongoing commitment to compliance.
Executive Chairman. Employee Share Plans not approved by shareholders.
Independent directors — due to issues associated the company's Constitution.
Nomination committee — does not exist — function previously undertaken by another committee with majority of non independents. Risk management — formal documentation of risks.
Item 7 is the main area of non compliance.
We do not intend to have a board nominations committee.
We will not comply with the strict definition of "Independent Director".
Risk and independence of directors.
Independence.
Former CEO the chairman, no nominations committee.
I suggest "independence of Directors" will be a problem.
Majority of independent directors.
Do not have nominations committee.
Likely areas of non-compliance include the requirement to have a majority of independent directors on the Board and that the Chairperson be an independent Director.
Recommendation 9.4 calls for payments of equity based remuneration to executives to be made in accordance with plan thresholds approved by shareholders. Given that the ASX has moved away from requiring shareholder approval for equity plans and that companies already are required to disclose equity benefits of directors and executives in annual reports we do not see any value in requiring shareholder approval for plan thresholds.
No 45%
We have however, adopted a different definition of independent director from that suggested in the recommendations.

4.
a) Do you feel you have enough time to meet all of the minimum requirements by the next time you report?

Yes 87%
No 13%

Comment:

Do not think so and therefore may go into the next year.
Board structure issues re independent non-executive director.
Yes, but it will be a big ask (subject to my comments in 3 above) — The bigger and more complex the organisation, the more difficult implementation is to achieve.
I think the phasing in of the requirements in the manner proposed in the Guidelines is a good idea.
We will have complied with all of the requirements that we intend to satisfy in the short term.
The time between receipt of the ASX book and 1 July 2003 was inadequate.

b) If no, is this of concern to you?

Yes 33%
No 67%

Comment:

Not at this stage but may become so as time progresses and we see trends of actions of other companies.
Board structure issues re non-executive director — will need to provide explanation.
As a hard working Secretary who is trying to have the company always compliant it is a worry.

5. Do you think the Guidelines are fostering a culture of improved corporate governance across your organisation?

Yes 51%
No 22%
Unsure 27%

Comment:

Culture is already there — guidelines are doing no more than reinforcing.
Prescriptive, detailed guidelines do not foster a thinking approach to the subject.
Has promote discussion, review and action.
No significant changes were required.
The guidelines have not changed behaviours. (Any changes we will make will be form not substance).
However, the principles of good corporate governance have been around for a long time and should not be new to directors and senior management. Most successful businesses would previously have integrated these principles into their business.
You cannot regulate to enforce corporate governance. It has perhaps given structure to our existing Corporate Governance program.
It is to early to tell whether the discussion will translate into improved behaviour. It will be some six to twelve months before you can positively say if the guidelines have influenced behaviour and hence improved corporate governance within an organisation.
More one of acceleration of items that were already on the drawing board.
The danger is people are concentrating more on meeting the guidelines rather than working on the culture of improved corporate governance.
It was there without the Guidelines.
Yes although there is to some degree a mentality of "ticking the box" only in order to avoid any adverse investor reaction.
We had pre-existing compliance with what we consider to be the important elements of the Guidelines. We do not believe that there has been a cultural shift, but an increased awareness of the need for improved transparency in some areas.
Too early to judge.
Certainly not yet but my Directors are making positive comments about compliance.
The guidelines can still be followed and a company can still be fundamentally not complying with the spirit.
Time will tell, but required changes were not substantial.
We believe that our corporate governance standards are generally good, even though they may not all be currently documented to the ASX’s guidelines.

6. How much do you estimate it will increase your compliance costs to implement the planned changes:

0–5% 61%
5–10% 18%
10–20% 14%
20–30% 7%

Other (please specify):

It has been necessary to separate other duties from the secretarial position to create the capacity to implement the changes.

7. Which figure best reflects your company’s market capitalisation?

$0 – $100 million 13%
$100 – $200 million 9%
More than $200 million 78%