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Corporate governance

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Corporate governance

What is corporate governance?

How do you do it?

What is a board charter?

What should a board charter cover?

IT Governance

Corporate governance for ADI's


What is corporate governance?

Corporate governance is the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is improved.


Good corporate governance structures encourage companies to create value (through entrepreneurism, innovation, research and development) and provide accountability and control systems to monitor and manage the risks involved.


How do you do it?

There is no "one size fits all" approach to corporate governance. It depends on the size of your company, the nature of your business and the corporate culture.

The ASX Corporate Governance Council has issued Principles of Good Corporate Governance and Best Practice Recommendations for listed public companies.

APRA has issued corporate governance prudential standards for ADI's and insurers.

Regardless of your size or business, all corporate governance frameworks address the following elements:


* the roles of management and the board;

* Board structure,composition and membership:

* Boardroom conduct, relationships and performance;

* processes that safeguard, both internally and externally, the integrity of company financial reporting;

* Regulatory disclosures and shareholder communications;

* The rights of shareholders;

* Risk management and compliance processes;

* Strategy planning and monitoring;

* Effective and appropriate committee structures;

* Code of conduct: relationships with stakeholders and corporate social responsibilities.


What is a board charter?

A board charter defines the operation of the board, its roles and responsibilities and the separation of the role of the board from that of management.


A board charter ensures:


* the roles and responsibilities of the board are clear and understood by all relevant stakeholders;

* the operation of the board and the relationship between the board and management are clearly defined

* all directors have a clear understanding of the manner in which the board will conduct itself and the organisation’s expectations of them as directors.


What should a board charter cover?

A board charter sets out:


* the responsibilities of the board;

* the board’s relationship with management including delegations of authority and communications between directors and staff;

* board committees, including the board’s power to establish committees, those in place at a given point in time, the process for appointing directors to committees and any relevant administrative requirements

* how policies are developed and approved;

* the role of the chairman and the procedures should the chairman be absent from a meeting of the board;

* the conduct of board meetings including the timing, frequency, style and approach to meetings, and details of quorum and voting requirements;

* other operational matters including:

  • the content, preparation and distribution of minutes
  • the role of the company secretary
  • circulation of papers
  • attendance expectations
  • when directors can seek independent advice, or have access to outside advisors

* membership issues including:

  •  the independence of directors
  •  retirement of directors
  •  performance appraisal processes
  •  the size of the board
  • qualifications and experience.


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