Purpose

Corporate Governance refers to a system or set of rules, processes and practices with the help of which a company is directed and controlled. Stakeholders play an essential role in the process of corporate governance. They are the key performers of the company. The basic goals of these organizations are to have such a framework that has effective governance that consists of the needs and circumstances of the individuals. A Board of a company helps in reviewing the major reflection of corporate governance on the organization. However, in Australia, Corporate Governance has developed over the years. The basic purpose of corporate governance is to give protection to the companies and individuals who are engaged with them. However, plenty of disputes and difficulties have been faced by the companies of Australia while the development of corporate governance.

The purpose and aim of corporate governance is to highlight the practices for the undertakings that are a part of the ASX. The objective of this is that the Council can have a view of it for accomplishing the results of governance. The expectations of the investors should also be fulfilled. For the ability of the Council to recognize the various identities, it should adopt the practices of the government (Lexisnexis.com 2018). This process will not request lay down the corporate governance practices that a proper listed entity should adopt. Thus, the practices of good corporate governance are required in Australia and they are noteworthy in establishing the capital cost in a global market

Corporate governance focuses on how it will have an effect on Council of Australian Securities Exchange (Swan 2014). Recommendations and a few principles are generally used in the process of corporate governance in a company. In the corporate sectors, the main issue is ethics that is related to the activities of the corporations. The Board is measured and treated to be as one of the listed entity in which a Council recommendation is not appropriate according to the arrangements of the governanc

The relevance of the Corporate Governance aspects

The listed entities of Australian Securities Exchange are applied with the recommendations and principles in spite of the legal structure whether they are established in Australia or any other country. Corporate governance has a few principles that are carried out especially for the application in the entities of ASX (Young and Thyil 2014). These principles are structured in such a way that the company gets advantages in some way or the other. The listed entities must determine and unveil the responsibilities and role of the board and management. The purpose of this is to recognize and observe the evaluation of the company’s performance (Larcker and Tayan 2015). The Board’s composition and size must be suitable for discharging the duties.  The entities that are listed as a part of the ASX should be ethical nature. The rights of the security holders of the listed companies must be revering and producing them with appropriate knowledge and information (Corkery, Mikalsen and Allan 2017). Therefore, when a company of Australia is applied with corporate governance, it must determine a sound risk management framework and can assess the level of effectiveness.

Discussion

Admission of the fact from where recommendation is followed

The Council involved with the ASX should be aware of the information related to the listed entities so that no kind of legalistic approach is applied in their disclosures. The companies that are listed must follow all the recommendations and provide the information regarding the policies and practices (Chan, Watson and Woodliff 2014). These must follow the recommendations as compared to the policies that are generally applied. The audit committee and the members should inform the Council regarding their experience and qualification.

Powers and authority of the shareholders in the management of corporate governance

In general, the shareholders of the listed entities of ASX have the authority to appoint the Board members. They also have the power to approve the members based on their qualification. While exercising the powers, the shareholders must make sure that they are ethical in nature. The approvals basically need a majority number of votes and approvals in the business of the company. The composition of the company includes delegates and operations of the business (Beekes, Brown and Zhang 2015). The size and composition of the business must be registered. Due to the circumstances, there are reductions in the capital and also because of special resolution. Therefore, the maximum number of votes is needed for that special resolution of the company. The approval is needed for the companies, as it is a merit regarding the parties. The funds that are related to the pension and other investors attain significant positions in plenty of companies.

Disclosures of Corporate Governance

The listed companies and the Council expects to take advantage of the opportunity to aim on the annual report for publishing their corporate governance. If the listed companies desire to include their statement of corporate governance in the annual report, then the Council must be informed about the disclosures and the statements of the corporations (Cunningham 2015). The corporate governance statement of an entity, should provide relevant information that is easily accessible and where the statement shows if the parties are interested can acquire that particular copy of material (Sagepub.com 2018).

Sources of Corporate Governance

The essential sources include Australian Securities and Investment  Commission and Corporation. This consists of the listing rules of ASX and the constitutional law. The Council members should be informed about the sources. The companies should be able to follow and administer the listing the existing rules of ASX (Freeman 2015). The recommendations and the rules can be applied in the ASX Corporate Governance Council. This approach consists of the customers as well as the protection of the entities of company’s environment. Hence, the Council members should be provided with proper assistance while dealing with the aspects of the corporate governance.

The relevance of the Corporate Governance aspects

Issue faced by the Australia Securities Exchange (ASX)

The Australian Securities Exchange has faced a few challenges when corporate governance was forming the companies. There have been disclosure requirements in the companies when the directors have gone through serious challenges while executing the legal duties of the material disclosure (Lama and Anderson 2015). Ethics plays n essential element as well while dealing with other issues of the company. Such a situation includes the financial risk globally in the subject matter of corporate governance (Safari 2017). In Australia, the regulators have developed their aim and objective on the culture of the entities. It should focus on how it can be related to the conduct of the management and the employees. The Council members must be able to regulate the services financially since it is an element of the corporate governance.

Transparency and Disclosure

The Board of the companies is usually held to be responsible if there is no proper disclosure or transparency. The duty of the Board is act accordingly with care as it is also their legal responsibility. Along with such legal responsibilities, it also has statutory duties approvals of reports and managing the transparency systems within the company (Kent and Zunker 2017). An Australian organization should inform the ASX about the information related to the material price. The objectives of the governance ensures that the companies put formal mechanisms to make sure that relevant information is noticed by the senior management.

Duties of corporate governance

The Board of Management of a company has the responsibilities and duties to take all the necessary decisions. The chief duty was to manage all the existing practices and systems of the corporate governance of the companies. The duty of the Board is to appoint the chief executive, remove them if required, appoint senior executives and monitor their performance (Council 2014). The Board approves, directs and considers the usual strategies and methods that are suggested by the management for implementation. It is also important for the Board to approve the capital expenditure and monitoring the budgets. The duty and responsibility of the Board is to review the framework of the risk management and systems of the company (Shimeld, Williams and Shimeld 2017).

Engagement of employees in corporate governance

Employees are considered as the officer of a company who are not involved with the responsibilities of corporate governance. However, the responsibilities of the employees requires the compliance with the systems and policies of the corporate governance of the company (Xu, How and Verhoeven 2017). As per the common law, no employee is required to disclose any kind of misconduct occurring. It is the duty of the Council members to have check on the actions of the existing employees in a company. The employees while carrying out their duties should fill the requirements. There are protections that are designed in such a way so that the people in the organization get attentive to ASIC and other authorities for illegal behavior.

Admission of the fact from where recommendation is followed

Disclosure related to Corporate Governance 

The members of ASX should receive the prepared reports and data of the company. Such reports include the daily review of the actions and activities of the company for a year. The activities of the company consist of dividends and shares of the company (Klettner, Clarke and Boersma 2014). They must thereafter engage themselves with the security holders. However, proper and appropriate facilities and information should be provided for letting them to execute the duties as security holders. In case of smaller entities, association of the security holders at the AGM increases according to the requests. On the other hand, in case of larger entities, detailed program with private and institutional investors and the financial media interact. The annual and financial reports should be disclosed to the Board. Therefore, the chief aim of an investor is to allow the investors and other participants for gaining a better comprehension of the company.

Conclusion

It can be concluded stating that the Chair of the Australian Securities Exchange, Corporate Governance Council should inform the members of the Council regarding the actions of the companies. As per the Corporations Act, the key management prohibits the personnel of an ASX listed company of Australia. The purpose of this is to not to permit them from entering an establishment which would affect the exposure related to risk. The risk also includes the remuneration that has been vested. Therefore, a listed company that has a remuneration scheme establishes a policy as to how the participants can take a part in such sort of transactions.

References 

Beekes, W., Brown, P. and Zhang, Q., 2015. Corporate governance and the informativeness of disclosures in Australia: A re?examination. Accounting & Finance, 55(4), pp.931-963.

Chan, M.C., Watson, J. and Woodliff, D., 2014. Corporate governance quality and CSR disclosures. Journal of Business Ethics, 125(1), pp.59-73.

Corkery, J., Mikalsen, M. and Allan, K., 2017. Corporate social responsibility: The good corporation. Centre for Commercial Law.

Council, A.C.G., 2014. Corporate governance principles and recommendations.

Cunningham, M., 2015. ASX update: The emerging tech bourse. Company Director, 31(5), p.12.

Freeman, G., 2015. Investment: Platform alternative raises interest. Professional Planner, (74), p.22.

Kent, P. and Zunker, T., 2017. A stakeholder analysis of employee disclosures in annual reports. Accounting & Finance, 57(2), pp.533-563.

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Lama, T. and Anderson, W.W., 2015. Company characteristics and compliance with ASX corporate governance principles. Pacific Accounting Review, 27(3), pp.373-392.

Larcker, D. and Tayan, B., 2015. Corporate governance matters: A closer look at organizational choices and their consequences. Pearson Education.

Lexisnexis.com 2018, Source: https://www.lexisnexis.com.au/ [online], Retrieved on May 3, 2018

Sagepub.com 2018 Comparative Political Studies (CPS), Source: https://cps.sagepub.com/, [online]  Retrieved on May 3, 2018.

Shimeld, S., Williams, B. and Shimeld, J., 2017. Diversity ASX corporate governance recommendations: a step towards change?. Sustainability Accounting, Management and Policy Journal, 8(3), pp.335-357.

Swan, P., 2014. The ASX Governance Council and “independent” boards. Law and Financial Markets Review, 8(3), pp.196-198.

Xu, S., How, J. and Verhoeven, P., 2017. Corporate governance and private placement issuance in Australia. Accounting & Finance, 57(3), pp.907-933.

Young, S. and Thyil, V., 2014. Corporate social responsibility and corporate governance: Role of context in international settings. Journal of Business Ethics, 122(1), pp.1-24.