The ASX Corporate Governance Council has published an exposure draft of Proposed Amendments to the ASX Corporate Governance Council Corporate Governance Principles and Recommendations.

The proposed amendments take into account recommendations made in the last 12 months by:

• The Corporations and Markets Advisory Committee (CAMAC) Report “Diversity on Boards of Directors” dated August 2009
• The CAMAC Report “Aspects of Market Integrity” dated June 2009
• The Productivity Commission Inquiry Report “Executive Remuneration in Australia” dated January 2010.

An overview of the key changes are:

Principle 2 – Structure the board to add value

The proposed changes to Principle 2 are focused on promoting board diversity, with a particular focus on gender diversity.

Principle 3 – Promote ethical and responsible decision making

Diversity: The introduction of a new Recommendation 3.2, which requires companies to establish a diversity policy that includes measurable objectives in relation to gender diversity. A new Recommendation 3.3, which requires companies to report their achievements against their measurable objectives on gender diversity in their annual report. A new Recommendation 3.4, which requires companies to disclose the proportion of women employees in the organisation, in senior executive positions and on the board.

Principle 6 – Respect the rights of shareholders

Box 6.1 on ‘Using electronic communications effectively’ will be amended to include a new sub-point suggesting that companies consider arranging for advance notification of group briefings and make them widely accessible, including through the use of web casting through the internet and / or conference calls. Another new sub-point will be added suggesting that companies keep a record of the topics discussed at briefings with investors and analysts, including a record of those present, and the time and place of the meeting.

Principle 8 – Remunerate fairly and responsibly

Elevation of the existing commentary and guidance in Principle 8 on the composition of the remuneration committee to a new Recommendation 8.2. It is proposed that new commentary be included highlighting the potential for conflict of interest in having executive directors serve on the remuneration committee.

It is intended that the change in the reporting requirement will apply to an entity’s first financial year commencing on or after 1 January 2011. While the formal commencement date of operation of the proposed amendments to the Corporate Governance Principles and Recommendations is 1 January 2011, Council considers that, especially in the case of the recommendations on diversity, listed entities with a balance date of 30 June 2010 should be able to establish a diversity policy and report against the new Recommendations in respect of the year commencing 1 July 2010.