ASX Corporate Governance Council Recommendations on Diversity

Women on Boards has welcomed the announcement on 7 December 2009 by the ASX Corporate Governance Council of a proposal to expand the Corporate Governance Principles and Recommendations to require each entity listed on the Australian Securities Exchange - on an “if not, why not?” basis - to adopt and disclose a diversity policy that includes measurable objectives relating to gender.

Claire Braund, Executive Director of WOB, said the Council had gone further than had anticipated and its proposal did much to address the issues raised in the WOB submission.

"It is an historic development that embeds gender clearly into our business processes at the highest level. To comply with the Principles and Recommendations ASX companies will need to set measurable targets for gender and  report their progress. The importance of this step cannot be underestimated," Braund said,

Within their diversity policy, listed entities will be required, on an “if not, why not?” basis, to disclose in their annual
report:

  • Their achievement against the gender objectives set by their board; and
  • The number of women employees in the whole organisation, in senior management and on the board.

Alongside the new recommendations, changes will be made to the guidance commentary to:

  • Encourage nomination committees of listed entities to include in their charters a requirement to continuously review the proportion of women at all levels in the company. Commentary will highlight that it is the responsibility of the nomination committee to address strategies on board gender diversity and diversity in general.
  • Require that the performance review of the board include consideration of diversity criteria in addition to skills.

Also, boards will be required to disclose what skills and diversity criteria they look for in any new board appointment.

The Council’s communiqué also outlines proposals to improve listed entities’ record keeping of analyst briefings and to elevate the existing suggested composition of remuneration committees - that they be comprised of a majority of independent directors, be chaired by an independent director and have at least three members - to an “if not, why not?” recommendation.

Council expects to provide an exposure draft of the proposed changes to the Corporate Governance Principles and Recommendations for public consultation in early 2010 with an anticipated implementation date of 1 July 2010.

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