Wednesday, 19 August 2009

Australia: CAMAC to consider directors' guidance

The Hon Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law, has asked the Corporations and Markets Advisory Committee to consider one aspect of Australia's corporate governance framework: the guidance provided to directors. Specifically, Mr Bowen has asked CAMAC to:
  • examine the guidance or codes of conduct that are available overseas for corporate directors;
  • examine whether there is sufficient guidance provided to executive directors and non-executive directors in Australia to ensure that they have a clear understanding of their roles and responsibilities; and
  • advise whether the performance of directors would be enhanced by the introduction of guidance for directors, for example through a code of conduct or best practice guidance, by a relevant regulator; and if so what form that guidance should take. 
In his letter Mr Bowen writes:

While Australia has a world-class corporate governance framework, the importance of continuing to assess it against international best practice has been highlighted by the recent global economic crisis. An integral part of corporate governance best practice is that boards of publicly listed companies have executive directors, who are full time employees of the company, concerned primarily with the daily management of company business, and a majority of non-executive directors (NEDs) who are independent of management. NEDs provide a corporate board with particular skills, experience and independence, performing an important function in Australia’s corporate governance framework. In asking the Committee to examine what guidance is required for both executive directors and NEDs to fully understand the responsibilities of their role, I am particularly interested in what support can be provided to increase the engagement of NEDs with their position on the board and bring an independent and broad view to board decision making".

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