You have recently been appointed as a graduate accountant in a large accounting firm and currently working under the direction of one of the managers in the Corporate Advisory division. The manager has asked you to investigate and report on the draft Corporate Governance Principles and Recommendations(3rdedition), recently issued by the ASX Corporate Governance Council for public comment.
ASX is one of the world’s leading financial market exchanges which provides a full range of financial services for corporate and individual investors. It is one of Australia’s major trading centres and has been in business for more than 150 years. Since 2002, ASX has also been playing a role in the corporate governance practises in Australia. It convenes a Corporate Governance Council every year to discuss the expertise of various corporate houses in corporate governance and comes out with charters on the same (Farrar, 2008). This has come out in the form of recommendations with respect to corporate governance to be implemented by companies listed on the exchange so as to promote investor confidence in the market and the exchange as a whole.
A good corporate governance policy has become one of the key requirements of any company operating in the current market conditions. Given the back drop of the recent economic crises of 2008, it becomes all the more important for companies to have proper codes of conducts and corporate governance to ensure that the company takes all steps necessary to conduct its business and protects the shareholder interest at the same time (ASX, 2013). The changes that have been proposed in the draft report have been done so as to keep the policy in line with the current corporate trends and to iron out loopholes and areas of concerns for the organizations. A periodic review and change to the policy keeps the policy fresh and prevents it from becoming an outdated document which no one bothers to implement.