Corporate Governance Report: NAB and BOQ, Semester 2, 2024

This report provides a comprehensive analysis of the corporate governance practices of two Australian companies, National Australia Bank (NAB) and Bank of Queensland (BOQ). The report begins by examining the corporate governance strategies and policies of each company, including their adherence to ASX guidelines and the composition of their boards of directors. It then compares key corporate governance indicators, such as board size and the proportion of non-executive directors. The analysis further delves into specific corporate governance practices and policies, including risk management, financial management, and stakeholder engagement. Part B of the report defines corporate governance, its importance, and the consequences of corporate failure, referencing the Enron scandal as a prominent example. It also discusses principle-based and rules-based approaches to corporate governance, and the roles of ASIC and CLERP 9 in the Australian context. The report concludes by highlighting the significance of corporate governance in ensuring transparency, accountability, and long-term value creation for stakeholders.

Running head: CORPORATE GOVERNANCE PRACTICES
Corporate Governance Practices
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Part A.........................................................................................................................................2
Question 1..................................................................................................................................2
Corporate Governance Strategies and Policies......................................................................2
Question 2..................................................................................................................................3
Coporate Governance Indicators............................................................................................3
Question 3..................................................................................................................................4
Coporate Governance Practices and Policies.........................................................................4
Part B..........................................................................................................................................4
References................................................................................................................................10

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Part A
Question 1
Corporate Governance Strategies and Policies
National Australia Bank (NAB)
The corporate governance policies that has been followed by the NAB whereby it
discloses its corporate governance principles, strategies, practices and policies in the annual
report under the head corporate governance. The report states that the group’s corporate
governance has evolved over the years due to the consistent improvements. The NAB is
compliance with the third edition whereby the stated principles of the ASX Corporate
Governance Principles and Recommendations, which are mentioned in NAB’s 2019
Corporate Governance Statement and Appendix; these are also mentioned separately under
the section of corporate governance in the NAB official website (Tricker and Tricker 2015).
Followed by a brief discussion on the board’s responsibilities and performances, where the
duty and authority of the members are discussed. It also discusses about the constituency of
the board and key persons in the management under the head Board Renewal. Lastly, it
focuses on shareholders engagement, the medium through which the company communicate
with them (Starbuck 2014). The company constitutes twelve directors in total of which ten
are appointed as non-executive directors and independent. Mr Andrew Thorburn and Mr Ross
McEwan are the CEOs of the company (Nab.com.au, 2020). Mr Thorburn was appointed as
the director for the company from Aug 2014 to Feb 2019 with an experience of more than 32
years in banking sector. Mr Ross McEwan had an experience of 30 and more years in finance
investment industries and was appointed as the group’s CEO and managing director effective
from December 2019 (McCahery, Sautner and Starks 2016).

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Bank of Queensland (BOQ)
The Bank of Queensland discloses its corporate governance strategies policies and
practices on its official site under the about us section. Corporate governance of the bank is
explained in a systematic way; where all the details mentioned under respective heads. It
discloses the constitution of the bank, different committee and polices it adheres with. The
company has nine board of directors in all, of which seven are non-executive officers. Patrick
Allaway was appointed as the chairman of the group on 18th October 2019.
Question 2
Coporate Governance Indicators
a) The board size of the NAB is around which consist of nine independent non-executive
directors (that consist of chairman and one executive director) and the Group CEO. On the
other hand the board size of BOQ is around 11 whereby the board has around 9 directors,
whereby 8 of them were independent Non-Executive Directors and the MD&CEO (Knudsen,
Moon and Slager 2015).
b) The non-executive directors in NAB is around 9 out of the total board size of 10 stating
around 90% of the proportion. On the other hand, in the case of BOQ the total number of
non-executive directors is around 8 out of the total board size of 11 stating around 73%
(Boq.com.au, 2019).
c) In both the company he percentage of independent executive director is around 100%.
d) National Australia Bank:
Chief Executive Officer: Andrew Thorburn
Chairman: Ken Henry
Bank of Queensland:

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Chief Executive Officer: George Frazis
Chairman: Roger Davis
Question 3
Coporate Governance Practices and Policies
The National Bank of Australia ink respect to the fundamental element and culture the
practices followed and corporate governance policy provides the various rules and guidance
for making effective decision making in all the areas of group with a strategic operational
planning, various types of risk management compliance policies, financial management &
various types of external reporting, sucession planning & culture and managing experience of
customers and other outcomes. The company continuously discloses, whereby it aims to be
open and transparent with all the stakeholders that are commited for passing on material
informations to the stakeholders in an effective and timely manner (Nab.com.au, 2019).
The Bank of Queensland on the other hand, follows the structure of the ASX
Corporate Governance Policies. The BOQ well complies with the ASX Principles and
Australian Prudential Regulation Authority (APRA) (Boq.com.au, 2020). The corporate
governance policies that are developed by the company well helps in conducting and guiding
various courses of operations.
Part B
Corporate Governance is the key framework of mechanisms, rules, policies &
processes by which the corporations are governed or controlled. It refers to the system by
which the board of directors of a particular organisation ensures transparency and
accountability to its stakeholders that are shareholders, customers, employees, suppliers,
management and the government. It provides guidelines and directions as to how the

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company is governed and directed in a manner that helps in achieving its goals and aims and
add value to the organization in the long run. The framework constitutes two contracts
explicit and implicit contracts (Zabri, Ahmad and Wah, 2016). The contract is between the
organisation and stakeholders of company. It accommodates the distribution of various
responsibilities, rewards and associated rights. The later part of this contract consists of the
procedures for the reconciliation of interest of the stakeholders that is in accordance with the
duties, role and privileges that might be conflicted sometimes. Lastly, it consists of the plan
of action for proper control, guidance supervision and the flow of information to serve as a
system of checks and balances.
Governance refers to the set of rules, actions, responsibilities and policies that are to
be adhere to ensure smooth running and dictate good corporate behaviour. It is based on the
fundamentals of such as managing the organisation with integrity and fidelity, being
transparent to its stakeholders regarding all the activities and policies (Bhasin 2015). It
comprises all the necessary disclosures and resolutions, responsibility and accountability
towards the stakeholders of the company, compiles all the rules and laws of the land and the
commitments to run the business in an ethical manner. Shareholders and advisors are the
most important stakeholders who indirectly influence the corporate governance of an
organisation whereas the board of directors has direct control over the management of the
organisation and can have a significant outcome in equity valuation (Filatotchev and
Nakajima, 2014). Corporate governance is of crucial importance when it comes to
communication among stakeholders. For a company, it is not enough to be just profitable; it
strives to have good corporate citizenship through ethical practices, environmental awareness
and sound corporate governance practices. A good set of corporate governance helps an
organization in achieving the same. The thing that makes corporate governance a good set of

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governance is the transparency of a set of rules and governance it creates to its shareholders,
officers and directors.
Corporate failure can be defined as the discontinuity of businesses due to their
inability to reap enough profit or revenue to pay back the expenses. It does not happen
overnight; it comes with enough warnings at every point, which were ignored or overlooked
by the firm or the organisation. Many causes lead to corporate governance failure. It can
happen due to ignorance by the regulators, auditors, analysts; inadequately qualified
members; non-independent board and audit committee members who are ineffective in
governing mechanisms; management, who purposely undermine the various governance
structures by ignoring the internal controls and misinterpreting to auditors and the board.
Enron Scandal was one of the largest bankruptcy that happened due to the failure of corporate
governance. It happened in October 2001, which led to the bankruptcy of Enron Corporation,
an American energy company in Houston, Texas. Despite having structured and mechanised
corporate governance it failed. The primary reason that led to the failure was audit failure.
The auditors were unable to provide justifications to the suspected and questionable
accounting; they did not even examine the SPE transaction. Three major types of corporate
failure are a corporate body with negative returns, a corporate body that is insolvent and a
corporate body that is bankrupt. Every corporate entity should have a proper strategic plan to
overcome the same.
Good corporate governance is the primary concern of the directors of the company.
There are various approaches that an organisation take in order to apply its corporate
governance. The corporate governance should be followed as per the strict norms are given
by the directors as well as the government authorities of the respective country — two basic
approaches followed by any organisation in supporting the corporate governance. First,
principle-based approach, this approach focuses on the fact that there are different companies

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with different circumstances and it would be inappropriate to have the same set of rules for
every organisation; or same set of rules to every event of the same organisation. This means
that the most suitable corporate governance can have differed between the companies and
might change over time as its circumstances change. It argues that all should apply the code
of corporate governance and these codes are not rules but principles. If a company fails to
obey these principles, it should disclose this to the shareholders of the company and mention
the reason regarding the non-compliance of the same. Second, Rules-based approach, this is
an alternative to the principle-based approach. It is based on the fact that the companies have
to follow the rule's compliance with corporate governance. It states that companies have to
comply with the principles of good corporate governance. This is applied to some types of
company, mainly to the significant stock market companies. The companies to which it
applies must follow and obey the rules and few (if there) to the rules can be allowed. Unlike
the principle-based approach, the companies do not have a choice; all the companies need to
obey the same rules and meet the same minimum standard of corporate governance. It can
benefit from improving the confidence of the investors in the stock market companies if all
the companies are bind to comply with the recognised corporate governance rules. This
approach has certain disadvantages as well. The system to comply with the same standards
for all the company is too rigid because the same guidelines might not be suitable for
companies with different aims and structure.
ASIC stands for Australian Securities and Investments Commissions, is an independent
government body in Australia, which acts as Australia's integrated corporate, financial
services, markets and consumer credit regulator. It was set up under the Australian Securities
and Investments Commission Act 2001 (ASIC Act). The function of ASIC is to impose and
monitor the company and the financial service laws to protect the country’s consumers,
investors and creditors. Roles of AISC in Australia are as follows:

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1. To improve, facilitate and maintain the performance of the financial structure and
bodies in it.
2. To make the information regarding the companies available to the general public as
and when it is published.
3. To operate the laws in an effective manner and with the minimum procedural
requirement.
4. To receive the information and process it effectively and quickly.
5. To take necessary actions, so as to enforce and give effect to the law.
CLERP 9 stands from the Corporate Law Economic Reform Program, which governs
corporate law in Australia. It was approved in July 2004. The corporate disclosure focuses on
strengthening the audit reform and financial reporting framework. The program introduces
vital changes that are to be regulated to the corporate governance in Australia. The program
aims to modify the Corporations Act 2001 to be placed correctly to enhance the corporate
governance and accountability framework for the companies in Australia. Role of CLERP9 in
Australia are:
1. To provide a cost-benefit analysis of the proposed changes.
2. To regulate an appropriate balance between the industry and government regulation.
3. To improve synchronisation between its regulatory framework and the application of
the same in the world financial markets.
4. To facilitate the development of the regulatory and legislative framework.
5. To help in reducing the transaction costs for the Australian organisations and other
participants in the Australian market.
Independent directors are those non-executive directors who do not have any relationship
with the company act as a guide to the company’s stakeholders. They help in improving

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governance standards and corporate credibility. They play a vibrant role in managing the risk
of a particular organisation. Their main role is to set up a various committee in the company
to ensure good governance. Corporate governance as discussed, is referred to those set of
rules and principles, which helps a corporation in directing and controlling. Business ethics is
the principle that states how the business is carried out. These are the moral principles that
states the integrating values such as honesty, trust, transparency into the practices, policies
and decision making of the corporation. Business ethics is the heart of corporate governance.
It is one of the significant elements of corporate governance. Ethics are applied to all
boardroom strategies that are stated in the corporate governance and states how to
extravagance their suppliers and accounting principles. It is essential for a business to apply
ethics in its corporate governance in order to build a business reputation and customer
loyalty.
From the above discussion, it can be concluded that corporate governance is the set of
rules that are defined by every organisation. It follows different approaches depending upon
the company’s structure and norms. The primary purpose of corporate governance is to state
the rules and principles the company follows or must follow. It provides transparency to its
stakeholders. It is observed that there are different bodies and programs in Australia that help
in the operation of the corporate governance smoothly.

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References
Bhasin, M.L., 2015. Contribution of Forensic Accounting to Corporate Governance: An
Exploratory Study of an Asian Country. International Business Management, 10(4), p.2016.
Boq.com.au. 2020. Annual Reports | Bank of Queensland. [online] Available at:
https://www.boq.com.au/Shareholder-centre/financial-information/Annual-Report [Accessed
6 Jan. 2020].
Boq.com.au. 2020. Corporate Governance | Bank of Queensland. [online] Available at:
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