Corporate Governance: Aspects, Disclosures, and Challenges

This report discusses the various aspects of corporate governance, including its application, disclosures, and challenges. It emphasizes the importance of ethics and transparency in corporate governance and highlights the role of stakeholders, board of directors, and management. The report also examines the external aspects of corporate governance in the business world and the rights and powers of stakeholders in the management of corporate governance. It concludes with a discussion of the responsibilities of corporate governance and the rights of security holders.

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student
Name of the University
Author note

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Table of Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................3
Purpose............................................................................................................................................3
Discussion........................................................................................................................................4
 The application of the aspects of Corporate Governance.....................................................4
 Disclosures of Corporate Governance..................................................................................4
 Disclosure of the fact where a recommendation is followed................................................5
 Major sources of Corporate Governance..............................................................................5
 Challenges faced by the Australia Securities Exchange.......................................................6
 Rights and powers of the stakeholders in the management of corporate governance..........6
 Role of employees in corporate governance.........................................................................7
 Disclosure and Transparency................................................................................................7
 Requirement of corporate governance related to disclosures...............................................7
 Responsibilities of corporate governance.............................................................................8
 Rights of the security holders...............................................................................................9
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

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Executive Summary
The intention of the report is to highlight the aspects of corporate governance. The basic purpose
of the report is to inform the members of Council about the academic research relating to the
aspects of corporate governance. It also emphasizes on the significance of ethics in corporate
governance. This report intends to emphasize on the theoretical aspects of corporate governance
that highlights the stakeholders, board of directors and management. It also discusses on the
external aspects of corporate governance in the business world. Finally, the report is
commissioned to examine that the members of the Council must be aware of all the existing
aspects of corporate governance.

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Introduction
The rules, practices and processes by which a company is monitored and directed is
defined as the concept of corporate governance. The interests of stakeholders includes in the
process of corporate governance. It is known as the driver of the performance for the company. It
has plenty of ingredients and aspects of corporate governance (Larcker and Tayan 2015). The
common goals of such organizations are to have a framework of effective governance where the
circumstances and needs of the individuals are met. An effective evaluation of Board helps in
reviewing the basic incorporate reflection on the governance of the organization from various
perspectives. However, corporate governance in Australia has developed over the recent years.
The aim of this corporate governance was to protect the companies and individuals associated
with them (Beekes, Brown and Zhang 2015). Although, the companies of Australia have faced
certain difficulties during the development of corporate governance.
Purpose
The basic purpose and objective of corporate governance is to focus on the practices for
the entities that are related to the ASX so that the Council can view and are likely to accomplish
outcomes of governance and accomplish the rational potential of the major investors. Therefore,
the Council will be able to identify the various entities that should adopt the government
practices (Tricker and Tricker 2015). It will not request to lay down the practice of corporate
governance where a proper listed entity should adopt. Hence, demonstrably good corporate
governance practices are required in Australia and are significant in establishing the cost of
capital in a global market (Lama and Anderson 2015).

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Discussion
The concept of corporate governance discusses as to how corporate governance will have
an effect on the Council of Australian Securities Exchange. They have a few principles and
recommendations that are used in the process of corporate governance in a company (Adrian,
Wright and Kilgore 2017). The Board is considered to be one of the listed entity in which a
Council recommendation is inappropriate as per the arrangements of the governance.
 The application of the aspects of Corporate Governance
The principles and recommendations are applied in all the listed entities of Australian
Securities Exchange despite of the legal structure of whether they are determined in Australia or
any other country. Ethical aspects should also be applied while dealing with the companies and
the members related. These principles of corporate governance are carried out specifically for the
application in the entities of ASX. They are structured in such a way that it benefits the company
in some way or the other (Davies 2016). A listed entity should disclose and determine the
responsibilities and role of the management and the board. The purpose of this is to identify and
monitor the evaluation of the performance of the company. The size and composition of the
Board should be appropriate enough to discharge its duties. Companies that are listed under ASX
must be ethical as well. The companies that are listed should revere the rights of the security
holders by producing them with sufficient information. When corporate governance is applied in
a company of Australia, it should determine a framework of sound risk management and review
its effectiveness.
 Disclosures of Corporate Governance
As expected, the Council expects the listed companies to take benefit of the opportunity to
focus on the annual report for publishing their corporate governance. When a listed company
wishes to involve their statement of corporate governance in their annual report then the Council
should be informed about the statements and corporate disclosures (Bottomley 2016). The
statement of corporate governance must provide the material that is easily available and where
the statement shows whether the parties interested can obtain that copy of material.

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 Disclosure of the fact where a recommendation is followed
The Council must be informed about the listed entities to not take the legalistic approach in
their corporate disclosures. The listed companies must follow the recommendation as compared
to the policies and practices that are applied. The listed companies should follow the
recommendation and must explain the practices and policies (Larcker and Tayan 2015). The
Council should be made aware of the audit committee along with the members including their
qualifications and experience. The companies should be able to have a look at the statement of
their governance and not as a compliance document.
 Major sources of Corporate Governance
The significant sources are the Corporation and Australian Securities and Investment
Commission, which involves the listing rules of the ASX and the common and constitutional
law. The members of the Council must know these sources. The companies have to follow and
administer the listing rules of ASX. The rules and recommendations are normally applicable to
the ASX Corporate Governance Council’s. The approach includes consumer as well as
environmental protection of the entities (Adrian, Wright and Kilgore 2017). Therefore, the
members of the Council should be assisted while handling the aspects of corporate governance.
 Challenges faced by the Australia Securities Exchange
The Australian Securities Exchange have gone through a few challenges while dealing with
corporate governance of the companies. There are continuous disclosure requirements where the
directors of the companies have faced important challenges in carrying out their legal duties
related to the material disclosure (Beekes, Brown and Zhang 2015). It also involves global
financial risk in the concept of corporate governance. The regulators of Australia have improved
their focus on the culture of the corporate and how it is linked to the conduct of the employees
and the management. The members of the Council should regulate the financial services as it is a
part and parcel of the corporate governance (Appuhami and Bhuyan 2015).

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 Rights and powers of the stakeholders in the management of corporate governance
Among the listed entities of the ASX, the shareholders have the power in appointing and
approving the members of the Board. Thereafter, the constitution of the companies are delegates
their operations and management of the business of the company. The approvals require
maximum number of votes and key approvals are needed from the shareholders as per the
Corporations Act (Lama and Anderson 2015). The name and constitution of the company should
be registered. Secondly, reductions of the capital by special resolution vary on the circumstances.
However, majority votes are required for the special resolution of the company. Maximum
approval is required for the companies to provide advantage to the parties related. Security issues
are regarding the parties who must be approved by the majority of shareholders. In Australia, the
funds regarding pension ad superannuation and other investors acquire important positions in
plenty of companies (Appuhami and Bhuyan 2015).
 Role of employees in corporate governance
The employees who are not considered to be the officers of the company do not form the
responsibilities of corporate governance (Kara, Erdur and Karabiyik 2015). The duties owed by
the employees need the compliance with the policies and systems of the company’s corporate
governance. The common law does not require the employees for disclosing the misconduct of
other (Swan 2014). The members of the Council along with other individuals associated with the
corporation should carry out the activities in an ethical manner. The members of the Council
should keep a track on the activities of the employees in a company. Employees are required to
fulfill with the requirements to their own roles. The protections are designed in such a way so
that it encourages the people within the companies to alert ASIC and other existing authorities to
illegal behavior (Larcker and Tayan 2015).
 Disclosure and Transparency
For the process of transparency and disclosure, the Board of the company is held responsible
(Larcker and Tayan 2015). The legal responsibility of the Board is to act with care and
meticulousness. It also includes particular statutory duties for approving certain reports and its
obligation for managing the accountability and transparency systems within the company (Chan,
Watson and Woodliff 2014). Ethical transparency is significant among the members. An entity
or a company should always inform the ASX the information of material price-sensitive. The

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Principles of Governance help the companies to put in the place formal mechanisms for making
sure that the sufficient information is brought to the attention of the senior management.
 Requirement of corporate governance related to disclosures
Preparing the financial and director’s reports is a must and should be disclosed and sent to
the members of ASX. These reports should consider and prepare a review of the activities of
the year. These activities include development and details of shares and dividends. There
must be a remuneration report prepared which will include the remuneration of the director’s
as well (Williams, Bingham and Shimeld 2015). The Board will establish the remuneration
of the managers and the directors and their relationship between the performance of the
company and their policies. The auditor should provide the information about the non-audit
services. The annual report of the company focuses on the financial statements for the year
and the declaration of the directors regarding the notes and the statement. It complies with
the standards of the Australia, which gives a fair and true view of the position of the
company. The listed companies prepare the financial report and the reports of the director
that are required to forward to the ASX (Beekes, Brown and Zhang 2015).
 Responsibilities of corporate governance
The overall organ of the management is the Board who makes all the required decisions. It
has basic responsibility for all the systems and practices of the company’s corporate
governance. The Board is generally held responsible for removing, appointing the chief
executive, endorsing the appointment of senior executives and monitoring the senior
executive’s performance (Young and Thyil 2014). It directs, considers and approves
strategies that are proposed by the management for looking after the strategy of
implementation. Another responsible of it is to approve massive capital expenditure, capital
management and over-seeing the budgets. The Board monitors and reviews the framework of
risk management and compliance system of the company (Mitchell et al. 2016). Lastly, it
manages and oversees the financial system of the company. Functions are not delegated by
the directors that are imposed particularly on them under the statute while making the
declaration of the direction in the annual financial report (Chan, Watson and Woodliff 2014).

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 Rights of the security holders
This is considered to be as one of the basic principle of the corporate governance framework
for the entities that are listed. This is applicable in situation when the security holders should
be able to control the Board. With the help of the board, the management monitors the
routine of the entity (Qu et al. 2016). The companies should associate themselves with the
security holders and help them with suitable and relevant information and facilities for
allowing them to carry out their rights as the security holders should be beneficial to the
individual circumstances of the entity (Beekes, Brown and Zhang 2015). For smaller entities,
it may occupy little more than actively engaging with security holders at the AGM, meeting
with them upon request and responding to any enquiries they may make from time to time
(Kara, Erdur and Karabiyik 2015). For larger entities, it is likely to involve a detailed
program of scheduled and ad hoc interactions with institutional investors, private investors,
sell-side and buy-side analysts and the financial media. The basic objective of an investor
relations program helps in allowing the investors and other participants to obtain a better
understanding of the performance of the company (Chan, Watson and Woodliff 2014).
Conclusion
The Chair of the Australian Securities Exchange, Corporate Governance Council must
inform the members of the Council about the activities of the companies or entities. It should
be noted that the Corporations Act prevents the key management personnel of an ASX listed
company established in Australia (Miglani, Ahmed and Henry 2015). This is because to
refrain them from entering into an arrangement that would have the effect of limiting their
exposure to risk relating to an element of their remuneration that either has not vested or has
vested but remains subject to a holding lock. A listed entity that has an equity-based
remuneration scheme must determine a policy as to how the participants can enter into these
kinds of transactions and unveil that policy to investors. This applies whether the participants
in the scheme are directors, senior executives or other employees.

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References:
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defining corporate governance. Corporate Governance: An International Review, 25(6), pp.428-
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Appuhami, R. and Bhuyan, M., 2015. Examining the influence of corporate governance on
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Lama, T. and Anderson, W.W., 2015. Company characteristics and compliance with ASX
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