ASX review backs changes

A REVIEW of the Australian Stock Exchange’s corporate governance guidelines has recommended changes to assist smaller listed companies.

The original guidelines, released last year, attracted strong criticism on the basis they were appropriate only for big companies.

Specific changes recommended by the review group include less onerous rules for audit committees.

The review group also concluded that options may be an appropriate form of remuneration for non-executive directors, particularly for small exploration and technology companies that cannot afford large cash payments.

More generally, the review group wants the guidelines modified to make it clear there is more than one way of complying with the underlying principles espoused by the ASX.

The Perth-based members of the review group were Rick Crabb, a partner at law firm Blakiston & Crabb and a director of several listed companies, and Jerome Vitale, executive chairman of gold exploration company Burdekin Pacific.

Mr Crabb said the review group endorsed the ASX’s broad corporate governance principles but challenged the perception that companies needed to meet all of the recommendations of the ASX in order to comply.

In reality, they would comply if they explained why they had adopted practices different from the ‘best practice’ recommendations of the ASX.

Mr Crabb said the review committee also disagreed with the use of the term ‘best practice’.

He said each company should be able to form its own view on the most appropriate corporate governance practices.

Mr Vitale said the quality of disclosure would be a critical factor.

“The market needs to know that boards of directors have applied their collective minds to the principles,” he said. “How has the board dealt with those issues? That is the important question.”

Mr Vitale said small companies should be able to appoint non-executive directors who provide technical or legal consulting services.

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