1. Directors’ Duties & Responsibilities
Statutory responsibilities:
duty to act with care and diligence
business judgment rule (‘safe harbour’)
duty to act in good faith, in the best interests of the company, and for a proper purpose
duty to avoid improper use of position and information
duty to prevent the company trading while insolvent
duty to disclose material personal interests to other directors
Fiduciary duties:
ensure that you are not put in a position where your personal interests and your duties to the company are in conflict
ensure that you do not profit from your position (other than from director’s fees or other remuneration approved by the company/shareholders)
ensure that you preserve the confidentiality of company information
Directors’ protection:
Directors’ and Officers’ insurance
Deed of Access & Indemnity
Access to advisers
2. ASX Listing Rules (some of the requirements) See: asx.com.au/regulation/rules/asx-listing-rules.htm LR 3.1 & 15: Continuous disclosure Important! Must have a ‘Continuous Disclosure’ policy – see the CGPRs in section 4 below
Be careful not to disclose information before it is announced to the ASX (‘differential disclosure’, e.g. analysts, media)
Late disclosure – confidentiality alone is not enough
On the spot fines from ASIC, actions by shareholders
Note LR 3.1A and 3.1B for exceptions, and the ability of ASX to require disclosure to prevent a “false market”
LR 3.19A: Disclosure of directors’ interests • Must have an agreement between the Directors and company about notification
Must notify ASX within 5 business days of a change or ASX will query and potential fines
Appendices 3X, 3Y and 3Z are used to notify the ASX of a director’s ‘notifiable interests’ LR 4.2A, 4.3A: Half-Year & Full Year Results
Ensure appropriate signoffs are obtained from Chief Executive Officer/Chief Financial Officer
Certification from Chairman of the Audit Committee
Annual Report must include a ‘corporate governance statement’ (LR 4.10.3) setting out the extent to which the company follows the CGPRs (section 4 below)
Timely lodgement of results with ASX (half-year financial report – within 75 days; full year preliminary final report - 2 months from end of accounting period)
Note the Corporations Act also requires that a half-year report be lodged with ASIC within 75 days (section 320), and an Annual Report must be lodged with ASIC within 3 months (section 319)
LR 7.1: New Shares
Be aware of restrictions upon issues of new shares (not to exceed 15%)
Ensure that Appendix 3B is lodged (LR 3.10.3) upon announcement of the proposed issue, and upon issue of securities (LR 3.10.5) together with cleansing notice
Ensure ASIC form 484 lodged within 28 days
LR 3.20: At least 7 business days’ notice of a “record date” required LR 4.7B: Quarterly Cash Flow Report for newly listed companies LR 4.10: Annual Report requirements (see also the Corporations Act) LR 4.12: Monthly Net Tangible Assets Report (within 14 days) LR 10, 11: Transactions with associates/significant transactions LR 12: On-going requirements
3. ASIC Act and Corporations Act (some of the requirements)
Restrictions on issuing shares without a Product Disclosure Statement
The company must not engage in misleading or deceptive conduct
Insider trading prohibited – blackout periods
Obligation to cooperate with Auditors and answer questions truthfully
Lodging of relevant ASIC forms – any changes - observe time limits
4. ASX Corporate Governance Principles and Recommendations (“CGPRs”)
Principle 1: Lay solid foundations for management and oversight
Principle 2: Structure the Board to add value
Principle 3: Promote ethical and responsible decision-making
Principle 4: Safeguard integrity in financial reporting
Principle 5: Make timely and balanced disclosure
Principle 6: Respect the rights of shareholders
Principle 7: Recognise and manage risk
Principle 8: Remunerate fairly and responsibly
5. Board Composition & Meetings
Majority of independent Non-executives (CGPR 2.3)
Independent Chair
Appropriate mix of skills - qualifications and experience of Board members (CGPR 2.2 – Board Skills Matrix)
Sufficient number to address workload
Specialist committees appropriate to the organisation (see section 7 below)
Regular Board meetings
Accurate minutes and record-keeping
6. Annual General Meeting (LR 14)
Refer to CGPR 6 and the Corporations Act
28 days’ notice plus mail period required – hold within 4 months of financial year en
7. Committee Structure (Non-executive Directors)
Nomination Committee (CGPR 2.1)
Audit Committee – Non-executive Chairman with financial qualifications (CGPR 4.1)
Risk Committee (CGPR 7.1)
Remuneration Committee (CGPR 8.1)
8. Some other good governance/sustainability matters
Ethical Guidelines, Code of Conduct (CGPR 3)
Diversity Policy (CGPR 1.5)
Compliance programmes for:
Competition and Consumer Act
Environment Protection Act
Occupational Health and Safety
Discrimination and Harassment o Taxation reporting
General legal compliance
Risk management plan
Communications with Stakeholders
Policies and procedures
