Analysis of Corporate Governance Reports

The ASX Corporate Governance Council has released its analysis of corporate governance practices as reported in listed companies’ 2004 annual reports.

ASX listing rule 4.10.3 requires companies to disclose in the corporate governance section of their annual report the extent to which they have adopted the ASX Corporate Governance Council’s 28 Recommendations.

The analysis found the large majority of listed companies have fulfilled their reporting requirements satisfactorily, either confirming adoption of the Recommendations or providing ‘if not, why not?’ reporting.

However not all companies complied with the recommendations. For example 38% of reports reviewed disclosed the company had chosen to adopt the practice outlined in Recommendation 2.1 (majority of board to be independent) and 48% disclosed they had chosen to adopt alternative practices.

The following observations arise from the review of 2004 annual reports:
• Companies which addressed the recommendations in order, gave detailed cross-referencing or provided a table outlining adoption/exception reporting were the easiest to follow.
• Clear referencing to a website and to the remuneration section of the Annual Report were also attributes of the better reports.

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