Above Board: Board Advisory and Governance Update – Autumn 2025

The ASX Corporate Governance Council was first convened in August 2002, and comprises 19 business, shareholder, professional and industry organisations. Over two decades it has developed and published principles and recommendations on governance and related matters, adherence to which ASX listed entities are required to report on annually on an “if not, why not” basis. The fourth edition of the Corporate Governance Principles and Recommendations (CGPR) was adopted in 2019.

During 2023-25 the Council ran a lengthy process to consider amendments to the CGPR. However, the member organisations were unable to reach consensus, and the process was abandoned in February. The Council instead announced that listed entities will continue to report against the fourth edition. 

It is important that Australia has robust governance guidelines for corporate governance of listed entities in which the public invests, that reflect the relationship between sound governance structures and practices and long-term sustainable commercial success. We think the delay to the fifth edition provides time for the broader questions of the composition and operation of the Council and its relationship to ASX Limited, and the current coverage and level of prescription in the CGPR, to be re-examined. 

In early March, the Australian Prudential Regulation Authority (APRA) released eight proposals to amend its prudential governance framework for banks, insurers and superannuation trustees. This represents the first significant revision to its governance standards (which are legally binding for financial institutions) in over a decade. 

APRA’s proposed changes include:

• lifting requirements for boards to ensure they have the right mix of skills and experience to deliver the entity’s strategy; 
• raising minimum standards around the fitness and propriety of responsible persons, and requiring significant financial institutions to engage with APRA on succession planning and potential appointments; 
• extending existing requirements for superannuation trustees in relation to managing conflicts of interest to banking and insurance; 
• strengthening board independence, especially in relation to entities that are part of a group; 
• clarifying APRA’s expectations around the roles of boards, the chair and senior management; and
• introducing a lifetime tenure limit of 10 years for non-executive directors at an APRA-regulated entity.

While the prudential standards only apply to financial institutions, we think the proposals will open up a broader debate on board composition and tenure.

ASIC has released a discussion paper on the dynamics between public and private markets, seeking to deepen and sharpen the regulator’s understanding of evolving market dynamics and gather actionable ideas on regulation designed to enhance the operation of capital markets in Australia while ensuring continued market integrity and confident and informed participation by investors.

The discussion paper covers a variety of key issues and risks, and highlights some of the work ASIC is already doing to address them. For example:

• healthy public equity markets: ASIC is concerned about the future of Australia’s public equity markets, and the impact that a deterioration in the quality, diversity and depth of public equity markets will have on the economy. To address this, ASIC is exploring opportunities (with the ASX) to refine the pathway to listing and listing rules and is seeking feedback on initiatives to make public markets in Australia more attractive (while maintaining appropriate investor protections). ASIC is also seeking to understand the extent to which the greater expectations of public companies (compared to private companies) is a result of regulatory settings or community expectations.
• private market risks: the opacity of private markets poses a challenge for informed investor decision-making, raising questions about appropriate regulatory oversight of these risks. ASIC has highlighted the key risks of investments in private capital funds to include the misclassification of retail investors as wholesale investors, the management of conflicts of interest, the valuation of illiquid assets and investment illiquidity. On these issues, ASIC is seeking input on possible improvements to the regulatory settings and oversight of private markets, and the issues and risks that ASIC should focus on as a priority.
• retail investor participation: access to private markets has historically been limited to wholesale investors, with some minor exceptions – with retail investors often gaining access to private markets via superannuation or managed investment schemes. In both those scenarios, retail investors rely on the competence of the trustee or responsible entity. In addition to obtaining a better understanding of the size of current (and future) exposures of retail investors to private markets, ASIC is seeking feedback on whether current financial services laws provide sufficient protections for retail investors.
• transparency: ASIC and other regulatory agencies have limited insights into private markets, making it difficult to effectively monitor developments and proactively target supervisory work. In this respect, ASIC is looking at what additional transparency and other measures may be desirable to support market integrity, better inform investors and regulators, and the fair treatment of investors in private markets.

ASIC is seeking responses by 28 April to help inform its position on these issues and guide its future work. 

The release of ASIC’s paper on public and private markets coincided (although probably not intentionally) with a decision by the Parliamentary Joint Committee on Corporations and Financial Services (PJC) not to adjust the monetary thresholds that separate wholesale from retail markets in financial products and services despite those thresholds having been in place since the late 1990s.

Australian law allows entities to raise debt and equity capital from investors who are classified as wholesale without complying with disclosure and other investor protection measures that apply in retail financial markets. The Government proposed a review of the thresholds dividing wholesale and retail markets as part of its (since abandoned) review of the managed investments laws in 2023. The issue was subsequently referred to the PJC, which was persuaded by the investment industry not to adjust the current settings. Instead, it recommended that the government “consider establishing a mechanism for periodic review of the operation of the wholesale investor and client tests; and that any such mechanism include mandatory requirements for engagement and consultation with Australia's investment industry.”

The Federal Government has released its response to the review into the statutory amendments made to provide for a technology-neutral approach to company meetings and the electronic communication, signing and execution of documents. The review made a number of recommendations, largely supporting the amendments whilst recognising concerns and investor scepticism about the use of wholly virtual meetings, with the Government agreeing (or agreeing in principle) to all recommendations made. In particular:

• listed entities will continue to be allowed to hold virtual only meetings, provided that this is expressly permitted by their constitution; 
• the Government has indicated that it supports removing the requirement for unlisted entities to amend their constitutions to facilitate virtual only meetings; 
• ASIC, ASX, AICD, the Law Council and other relevant organisations have been encouraged to develop and provide guidance on the conduct of meetings (including virtual only meetings); 
• the changes concerning the electronic distribution of meeting-related materials will be maintained, with the Government supporting an alignment of the requirements for not-for-profit entities; and
• electronic signing and execution will remain.

Market insight from the 2024 AGM season suggests that virtual-only meetings remain the least utilised meeting format for listed companies – with in person meetings the preferred choice. In its response, the Government noted that maintaining the existing arrangements will give time to listed entities (and their members) to become adept with virtual meeting technology and for listed entities to engage more with their members and communicate more clearly to manage concerns. 

In February, Johnson Winter Slattery hosted the first roundtable of peak bodies in Sydney to develop guidance on the conduct of virtual and hybrid meetings. 

For some time, ASX Guidance Note 8 has set out ASX’s clear view that any market sensitive announcement regarding a new contract must include the name of the counterparty. This allows the market to assess the counterparty’s creditworthiness and standing and applies whether or not the counterparty wants to be named. ASX indicated that it might allow the omission of the counterparty’s name in very limited circumstances, but only where there is a strong and legitimate interest involved (such as in the defence or security sectors).

ASX has recently released Compliance Update 02/25 which outlines a slightly revised approach. While not displacing the current guidelines, ASX has given listed entities greater scope to omit a counterparty’s name if they are comfortable that such information is not, of itself, market sensitive. If an entity wishes to rely on this revised position the announcement must:

• confirm that the entity does not consider the identity of the counterparty to be price sensitive;
• confirm that the announcement contains all material information relevant to assessing the impact of the contract on price or value; and
• include a description of the counterparty so that the market can still form a view as to standing and creditworthiness.

ASX makes clear that situations where this new position is appropriate are likely to be rare and that it will generally expect full disclosure. It also outlines that it will take further action if (e.g.) it considers that there has been a ‘ramping announcement’, or if there is a material movement in price following speculation about the identity of the counterparty.

ASIC has completed its consultation on guidance for entities subject to mandatory climate-related financial disclosure under ch 2M of the Corporations Act 2001 (Cth). This included guidance on the narrow range of circumstances when ASIC is likely to modify or grant relief from specific reporting requirements.

On 26 February 2025, the European Commission adopted a package of proposals to simplify EU rules and boost competitiveness. The package included changes intended to limit the application of its Corporate Sustainability Reporting Directive (CSRD) to the largest companies (more than 1,000 employees) which is intended to focus reporting obligations “on the companies which are more likely to have the biggest impacts on people and the environment.” The changes also aim to ensure that reporting requirements on large companies do not burden smaller companies in their value chains. 

Our view is that standardised climate-related financial disclosure by entities that are significantly impacted by, or impact on, climate change is a positive development for Australia, but that the new regime is too broad. We have noted previously that while Treasury modelling intended the law to apply to about 1,800 entities, it is likely to capture more than 6,000 by 2028. We also think the inclusion of scope 3 emissions is burdensome on smaller companies in reporting entities’ supply chains, and that the settings for no-fault and low-fault liability (including civil penalty liability) should be re-examined. That will be a matter for the next Parliament. 

Australia was one of more than 90 countries to sign the Statement on Inclusive and Sustainable Artificial Intelligence for People and the Planet at the AI Action Summit in Paris in February. The statement builds on the work of the Bletchley and Seoul Summit Declarations. The Summit and Statement “reaffirm the need of a multi-stakeholder and inclusive approach to AI governance that will allow AI to be human rights based, human-centric, ethical, safe, secure and trustworthy.”

The signatories included China and the European Union, but did not include the United States of America or the United Kingdom. 

Australia does not specifically regulate the use of AI in business. Instead Government has articulated eight principles for ethical AI which are voluntary. There is a policy for responsible use of AI in government that requires government agencies to:

• designate accountability to accountable officials by 30 November 2024; and 
• publish an AI transparency statement and keep it updated by 28 February 2025. 

Several Commonwealth agencies are yet to comply with the policy. Nevertheless, we think the policy can provide a useful discussion prompt for boards considering appropriate safeguards for their entities’ use of AI. 

The Australian Charities and Not-for-profits Commission (ACNC) has published the results of its thematic review into the management by charities of safeguarding risks. Safeguarding is defined as “protecting the welfare and human rights of people that are connected with your charity or its work – particularly people that may be at risk of abuse, neglect or exploitation.” The ACNC considers safeguarding “part of a charity’s primary duty of care” and the direct responsibility of the charity’s responsible persons (including board or committee members).

The ACNC review found that:

• Strong safeguarding requires charities to take the time to establish appropriate processes, systems and procedures.
• Smaller charities may benefit from working with larger, more experienced charities and peak bodies.
• Safeguarding was often reflected in a charity’s culture but not always documented in formal policies and procedures, resulting in inconsistency in addressing risks.
• Most charities were aware of legal obligations, however, these were rarely recorded in a single place, such as a register of legal obligations. This made it difficult to keep on top of changes to relevant legislation.

Our Pro Bono practice continues to assist many of Australia’s leading charities with this key governance responsibility.