Corporate Governance in Australia: ASX and Woolworths Analysis

This report provides a comprehensive analysis of corporate governance, focusing on the principles and practices employed by the Australian Securities Exchange (ASX) and the Woolworths Group. It begins by defining corporate governance and its importance in ensuring fairness, accountability, and transparency in a company's relationships with stakeholders, including shareholders, employees, and the government. The report highlights the general principles of corporate governance, such as shareholder recognition, stakeholder interests, and ethical behavior, and details the benefits of good corporate governance, including economic growth and increased investor confidence. It then delves into the specific corporate governance principles of the ASX, outlining the eight core principles and their implications for listed entities. The report further examines Woolworths' approach to corporate governance, focusing on key aspects such as group risk management, code of conduct, continuous disclosure policy, and policies related to safety, health, and wellbeing, as well as fraud, anti-bribery, and corruption. The analysis also covers the company's Speak Up policy. The report concludes by emphasizing the importance of corporate governance in preventing mismanagement, increasing transparency, and enhancing a company's long-term value and growth potential.

Running head: ORGANIZATION LAW 1
Organization Law
Name
Institution

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CORPORATE GOVERNANCE
Corporate governance is a set of rules and practices through which the board of directors of a
particular company ensures that its relationship with shareholders, employees, community and
the government is fair, accountable and transparent. It enables a company to achieve its goals,
control risks and ensure there is compliance. It usually determines how a company is governed
and directly affects how it is managed. Corporate governance is necessary to ensure that the
individual, societal, economic and social goals of the company are balanced. It focuses on the
relationship between the board and the company’s shareholders, as well as the internal controls
and processes happening in the company.
A healthy relationship between the owners and managers in a company is important to ensure
that its performance is according to standard. The roles of the owner and managers should be
clearly defined. Corporate governance gives a guideline on how these interactions should be
done and thus should not be ignored. It works to make a business better through abiding to rules.
Through use of corporate governance, strategic decisions can be made more effective. The
highest authority is usually given to the board of directors. Corporate governance is usually
urged by significant factors such as efficacy and globalization. It ensures that there is
transparency, which eventually leads to economic development that is balanced. It also ensures
that the shareholders rights are being exercised while the company recognizes theirs fully. At the
same time it encourages moral, ethical and a trustworthy environment.
GENERAL PRINCIPLES OF CORPORATE GOVERNANCE
 Shareholder recognition which is important in maintaining the stock price of a company.
 Stakeholder interests which help improve the relationship between the company, press
and community.

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 Clearly outlining the responsibilities of the board to stakeholders.
 Upholding ethical behavior
 Ensuring transparency in all business dealings.
BENEFITS OF CORPORATE GOVERNANCE
 When done properly, good corporate governance leads to economic growth and corporate
success.
 The investors’ confidence in the company is maintained, thus the capital of the company
can be raised effectively.
 The cost of capital is lowered while the share price is impacted positively.
 Objectives that are of interest to the company and shareholders become more achievable
 Risks that might have a negative impact on the company and shareholders are
significantly reduced. Mismanagement, wastage and corruption are also eliminated.
 It helps the company to develop and in brand formation.
 The interests of the organization and shareholders are managed in a way that benefits
both parties.
 Proper governance improves a company’s ability to get external funding hence enables it
to grow. This is an important aspect especially for small businesses.
AUSTRALIAN SECURITIES EXCHANGE
The Australian securities exchange (ASX) is the primary security exchange in Australia. It is
in charge of overseeing compliance of its operating rules and promoting corporate governance in
its listed companies. It also helps educate retail investors.

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The Australian Securities Exchange has come up with approaches to ensure that the entities
listed under it achieve good outcomes and meet reasonable expectations of most investors in
most situations. These approaches are summarized under eight central principles.
Since different entities adopt different governance structures, the principles are not
mandatory.
AUSTRALIAN SECURITIES EXCHANGE CORPORATE GOVERNANCE
PRINCIPLES
1. Structuring the board so that it is effective and adds value. The board should be
structured so that it is of an appropriate size, with members that have the commitment,
knowledge and skills to operate the industry so that its duties are discharged effectively and
value is added to the company.
The board of an entity is responsible for providing leadership, setting up the objectives of the
entity, appointing the CEO and replacing him if necessary, approval of budgets and major capital
expenditure and monitoring how effective the governance practices of an entity are, among other
responsibilities.
2. Responsibility, being ethical and acting lawful should be a culture instilled within
the entities. The listed entity needs to articulate its values and ensure that any breaches in set
codes are made known to the committee or board of governors.
The entity should have a code of conduct for the directors, employees and senior executives,
and ensure that the board of directors is informed in case there is a breach of that code.
3. A solid foundation for management and oversight should be laid. The boards of
governors and management have assigned roles and responsibilities that are used to review their
performance.

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4. Disclosures should be balanced and timely. Timely and balanced disclosures of all
kinds concerning the listed entity should be made and material effect on the price and values of
the entities securities made available.
The role and responsibilities of team members should be in compliance with the entities
disclosure obligations. The policy should also be reviewed periodically to make sure that it is
effective and to identify any areas that any require changes.
5. Security holder’s rights should be respected. The rights of security holders should be
respected by providing them with appropriate information and facilities.
These rights include access to any information they may require about the entity as well as its
governance. Communication with them should be done openly and honestly and their
participation encouraged in meetings with security holders.
6. Ensuring that the integrity of corporate reports is safeguarded. The corporate reports
should be verified through an appropriate process initiated by the listed entity.
7. Risks should be recognized and managed. A sound risk management framework
should be established by the listed entity and reviewed periodically to determine its
effectiveness.
An entity should have a board specifically appointed to oversee risks. This board should
consist of at least three members, who should all be independent directors.
8. Fair and responsible remuneration. In order to attract and retain high quality directors
the listed entity should pay director remuneration. They also need to ensure that their values and
risk appetite are aligned with the values of the security holder.

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IMPORTANT ASPECTS OF CORPORATE GOVERNANCE IN WOOLWORTHS
GROUP
A. GROUP RISK MANAGEMENT.
Group risk management is important since it ensures that legal and financial risks that are
identified are easily and quickly mitigated. This approach to corporal governance is in line with
Australia security exchange principle where risks should be recognized and managed.
The principles related to risk management policy include risk ownership, risk culture which
provides a strong commitment to risk management, risk identification where the key risk factors
that could impact the performance of the business are identified, risk assessment and response
and risk reporting.
In order to manage risks, Woolworths has come up with an effective risk management
framework that is easy to follow and ensures that each business is able to identify, assess,
respond, manage and report any identified risks.
Responsibilities have been given to different tiers, including the board of directors who
provide risk oversight, the CEO who is accountable to the board and is in charge of leading and
directing senior management. The senior management is in charge of effective implementation
of risk management culture across Woolworth’s shops while the team members comply with the
policies, framework and standards which address risk management.
Risk management is important as it saves valuable resources and reduces legal liability.
People and assets are protected from harm and threats of litigation are reduced.
B. CODE OF CONDUCT
The Woolworths code of conduct outlines what is expected from all team members of the
company, including the board members, contractors and employees.

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It outlines the values that they are each expected to uphold, including being open minded,
learning from one’s mistakes, integrity and caring about the wellbeing of others, diversity and
inclusion. It also details and guides them on how they are supposed to work together so as to
ensure prosperity of the company.
The code of conduct guides team members on how to act professionally to ensure safety and
wellbeing and provide a positive workplace environment by reducing any potential sources of
conflict or situations which may damage their reputation.
The code of conduct supports decision making in a company and is related to the ethics of an
organization. It improves how employees deal with daily problems and thus creates a positive
environment that allows the company to prosper.
C. CONTINUOUS DISCLOSURE POLICY
This policy ensures that shareholders are provided with direct and equal access to information
of the company. This promotes investor confidence in the company as well as its securities. It is
in line with the Australia Security Exchange principle that requires timely and balanced
disclosure of all manner of information.
Such information may include market sensitive information and the materiality of an issue
which may have a significant impact on the group’s strategy and performance. A disclosure
committee is set in place to determine areas when an exception to the policy may apply, such as
when it would be illegal to disclose the information or if it contains incomplete information of a
negotiation.
D. SAFETY, HEALTH AND WELLBEING
The safety of an environment which promotes the health and wellbeing of an individual
directly attracts customers, business partners, visitors and contractors.

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This Woolworths policy encourages a culture where the team members are proactive instead
of reactive. They are encouraged to be accountable for the safety of the environment through
effectively consulting, cooperating and coordinating activities that create a work environment
that is safe for all. Relevant information, instructions, supervision and training is given to reduce
accidents and the employees are encouraged to comply with laws, requirements and processes.
E. FRAUD, ANTI- BRIBERY AND CORRUPTION POLICY
Corruption in a company can happen through wrongful use of funds, misuse of office by
company officials and dishonesty in financial dealings. In the long run corruption affects a
company’s profitability and can lead to loss of trust and confidence of shareholders and
investors. It also damages the image of the business.
The fraud, anti- bribery and corruption policy works to ensure that the reflection of
Woolworth’s core values can be seen. They refrain from conducting business with other
organizations that engage in corrupt activity.
Team members are usually expected to work with integrity and comply with the policies.
They are discouraged from offering or receiving bribes from any other team members or anyone
working on behalf of the company.
Incase reports are made, an investigation is done and action taken and the matter reported to
appropriate authorities. Breaches in policy result in disciplinary action and may eventually lead
to termination of contract or criminal prosecution.
F. SPEAK UP POLICY
A speak up service has been created to encourage suppliers and consultants to speak when
they do not feel like an issue can be dealt with directly by the company. This can be because of

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fear of ruining their relationship with the company, believing that the issue will not be handled
properly or if the issue had been raised before and was not handled properly.
The service includes but is not limited to areas where there is a conflict of interest, human
rights violation, risks that may affect people or product safety and incidences of corruption and
breach of law.
The company provides confidentiality when the speak up service is used. Once sufficient
information is provided an investigation is carried out and appropriate action is taken.
The Speak Up service encourages feedback from the suppliers and consultants. It maintains a
positive relationship between the two parties and prevents loses from occurring from either ends.
CONCLUSION
Good corporate governance is important as it prevents mismanagement of a company. It
clearly outlines the roles and responsibilities of each individual working within a company and
makes it more transparent and accountable to shareholders and investors. This is important as it
ensures that the company operates efficiently and effectively and reduces exploitation of
shareholders.
If a company has good corporate governance then its long term value is increased. The
company’s potential to grow also improves. Risks are reduced and its reputation is strengthened.
It is therefore important to ensure that the formation and compliance of policies related to
corporate governance are not ignored.

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REFERENCES.
corporate Governance - Definition, Scope and Benefits. (n.d.). Retrieved from
https://www.managementstudyguide.com/corporate-governance.htm
Why is Corporate Governance Important? (n.d.). Retrieved from
http://www.businessdictionary.com/article/618/why-is-corporate-governance-important/
Woolworths governance, speak up, whistleblower, whistle blowing. (n.d.). Retrieved from
https://www.woolworthsgroup.com.au/page/about-us/our-approach/corporate-governance