Corporate governance (CG) principles and rules are a critical factor in building confidence and trust in capital markets and companies around the world. Yet, the ways in which markets have established and refined their corporate governance frameworks vary widely.
Balancing Rules and Flexibility, a study of corporate governance requirements across 25 markets, aims to address these gaps, and help board directors, regulators and risk management practitioners understand the similarities and differences in corporate governance requirements.
The report is intended to stimulate discussion on how corporate governance requirements can be best defined and enforced both within and across markets. This is particularly relevant to developing countries seeking to grow their economies and capital markets.
In Australia, under Listing Rule 4.10.3, ASX listed entities are required to benchmark their corporate governance practices against the current version of the Council’s Corporate Governance Principles and Recommendations: 3rd Edition [PDF 1.41MB] which was released on 27 March 2014 and took effect for a listed entity's first full financial year commencing on or after 1 July 2014.
The rule effectively encourages listed entities to adopt the ASX Corporate Governance Principles as recommended practices but does not force them to do so. It gives a listed entity the flexibility to adopt alternative corporate governance practices, if its board considers those to be more suitable to its particular circumstances, subject to the requirement for the board to explain its reasons for adopting those alternative practices.