Corporate Law: Compliance and Consequences for Commonwealth Bank of Australia

Running head: CORPORATE LAW
Corporate Law
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Part A
The Commonwealth Bank of Australia is a company whose conduct is being considered
by the Royal Commission to inquire and report the misconduct in the organization (Tanzer,
2016). Royal Commission started its investigation on the financial service industry regarding the
misconduct within its system including forged documents, alleged bribery and others. The
Commission in its financial advice closing submission found that clients were charged fees by
the entities of CBA for no service. Further it was alleged that they did not have adequate
resources to provide ongoing services to their clients. It was also submitted by the Council
Assisting that with respect to orphan child, there were instances of contravention of Sec 12 DI(3)
of ASIC Act. Commonwealth Bank of Australia follows a strict corporate governance rules. It
has a focus on creating a governance to strengthen the relationship with their customers (Toohey,
2014). It has always been their objectives to reduce and control the risk outcomes. The
Commonwealth Bank of Australia has a commitment to improve the financial well-being of their
customers (Commbank.com.au, 2018). Their corporate governance practices are developed and
refined from time to time with the evolving regulations and laws, and stakeholders expectations.
The organization has set up an effective governance policy which determines the appropriate
arrangements for corporate governance of the Bank. A board has been composed for
Commonwealth Bank of Australia to frame the corporate governance policies for the
organization and its subsidiaries. Their governance policy includes approving the share trading,
anti-bribery policies, anti-corruption policies, delegation of authorities policies and continuous
disclosure. The company has adopted a code of conduct which prohibits money laundering and
counter terrorism. The company follows a strict principle for fraud control and whistleblower

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policy. The arrangement was made in compliance with the recommendations mentioned in the
third edition of the ASX Corporate Governance Council Corporate Governance Principles and
Recommendations. The Corporate Governance Statements of the company published on 8
August 2018, is an example of its ideal corporate governance arrangements. The practices which
they had adopted have followed the recommendations which are set out in the ASX Corporate
Governance Council’s Corporate Governance Principles and Recommendations. The
Commonwealth Bank of Australia has implemented policies and drafted a code of conduct,
which regulates the behavior of the Directors, Employees, Senior Executives and the
stakeholders. They follow a culture which provides whistleblower protection to their people
(Matthews, 2016). An anti-corruption and anti-bribery policy is implemented in the institution to
protect their customers and communities. The adherence to good corporate governance of the
company is reflected in their policy for the director which imposes certain duties on them.
Duties of directors
Directors of Commonwealth Bank are obligated to follow their duties and
responsibilities. After the alleged scandal of money laundering incident took place, the company
has improved their policy and set up a Board. The Board assesses on a regular basis, the
independence of the Directors to ensure that the Non-Executive Director are engaged in any
business that would interfere with their position. The directors are required to be careful to
disclose any material relationship or contact according to the Corporations Act. The Directors
should strictly adhere to the policies relating to the matters of voting, in which they may have an
interest. The details of the offices which are held by Directors with other organizations should be
set out in the website of the Bank and in the Directors’ Report. The Directors should not be
associated directly with any substantial shareholder. The Non- Executive Directors are not to

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carry out any role for the Bank except for the role of a Director. The Non-executive Directors are
bound to not having a material contractual relationship with Commonwealth Bank except for the
role of the director of the Bank.
ASX Corporate Governance Council Corporate Governance Principles and
Recommendations
The principles which have been mentioned in the ASX Corporate Governance Council
Corporate Governance Principles and Recommendations have been followed by the
Commonwealth Bank of Australia. The guidelines have provided that the corporation should act
with ethics and responsibilities. A company should maintain regular and balanced disclosure. It
should recognize the risk factors and mange it (Klettner Clarke & Boersma, 2014).
Disclosure
The Commonwealth Bank of Australia takes into consideration their obligation to make
continuous disclosure The Bank has a policy which is written to comply with the obligation to
make disclosure. The company is expected to disclose immediately any information in the
market which would materially affect the price or value of CBA shares. The directors, executives
and secretary of the company needs to identify and material information to their people. The
information regarding changes in financial performance, a debt capital raising, a legal dispute,
any material fraud, changes in the Board of Directors or Group Executives, changes in credit
rating applied to the Bank or its securities, a matter which may adversely affect the reputation of
Commonwealth Bank of Australia should be disclosed to the market (Continuous Disclosure
Policy, 2018). The Commonwealth Bank of Australia should immediately disclose the material
information to the ASX unless it comes under the exempted criteria.