Corporate Governance: An Overview

Running head: BACHELOR OF ACCOUNTING
Corporate Law
Name of the Student
Name of the University
Author Note

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Table of Contents
Corporate governance: An Overview..............................................................................................2
Corporate governance: Concept and significance in corporate sector.............................................2
ASX Principles and Recommendations...........................................................................................3
‘If not, why not’ approach...............................................................................................................4
Monitoring of implementation and change in ASX Principles and Recommendations..................6
ASX Governance principles and Recommendation: The Evolution...............................................6
Relation between the ASX principles and Listing rules..................................................................7
Implementation of corporate governance principles: Disclosures...................................................7
ASX Monitoring of Corporate social responsibility........................................................................8
Need for ASX Principles in Non-listed public companies..............................................................9
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10

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Corporate governance: An Overview
In the modern era of global competition where there is lack of economic certainty, it is
imperative to understand the role played by the business corporations. The framework of
practices and rules by which a board of directors through which board of directors exercises
control or direct the company, is known as corporate governance framework. In other words,
corporate governance refers to the relations and the processes by which a corporation is directed
or controlled by the directors of the company (Rao and Tilt 2016). An effective corporate
governance framework aims at striking balance between the interests of several stakeholders of
the corporation. The market-oriented economy and globalization are significant factors that make
corporate governance quintessential for the corporations in the modern day.
Corporate governance: Concept and significance in corporate sector
Corporate governance refers to the approach in which a corporation is governed. It is a
technique or a mechanism that is used by the directors to govern the company. The corporate
governance framework refers to the interaction that takes place between several participants
including the stakeholders, shareholders, management and the board of directors of the company.
An effective corporate governance framework is significant in a corporate sector as it
assures the providers of finance of receiving a fair return on their investment. It does not
distinguish the tasks or functions of the managers and the owners rather ensure that their
functions are harmonized. Further, the framework of effective corporate governance ensures
accountability and transparency of the corporation towards the stakeholders as well as the
shareholders of the company (ArAs 2016). The concept ensures that the rights of the

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shareholders are safeguarded and that functions are carried out in the best interests of the
stakeholders and the community altogether. Good corporate governance encompasses both
institutional and social aspects that encourage a corporation that is trustworthy as well as
ethically and morally upright.
ASX Principles and Recommendations
Purpose of ASX Principles and recommendations
In order to promote good corporate governance, the ASX Corporate Governance Council
has set out Principles and Recommendations (Principles and Recommendations) in 2003 as
minimum standards to be followed by the corporations in order to achieve good governance
outcomes. The Principles and Recommendations have been stipulated in accordance to the ASX
Listing Rule 4.10.3 that required the listed entities to either publish on its websites about the
principles and recommendations that it has implemented in its practice or include the same in the
annual report of such listed entities (Clapp and Rowlands 2014).
However, the Principles and Recommendations are not mandatory but the Board of
Directors are not obligated to adopt such principles but they are required to provide explanations
if they do not adopt such principles and recommendations. The ASX Council stated that different
types of entities might legally adopt various governance practices depending on their
complication, size and corporate culture resulting which the ASX Principles and
Recommendations do not endow with any corporate practices that is binding upon the listed
entities to adopt.
ASX Principles and Recommendations: The Structure