ASX Listed Companies must have Board-approved Organisational Values, a Code of Conduct and new policies by 30 June 2020

For many Australian listed entities, new obligations must be met by 30 June 2020.

With all the pressures on businesses since 2020 kicked off, it can be hard to maintain business-as-usual and keep in mind all of our compliance obligations. For listed companies, the ASX Corporate Governance Principles and Recommendations (4 th ed) introduced significant new obligations for financial years commencing on or after 1 January 2020.

Principle 3 now places a strong emphasis on culture and values.  It provides that: “a listed entity should instil and continually reinforce a culture across the organisation of acting lawfully, ethically and responsibly“. The revised principle is supported by three new recommendations: articulation and disclosure of organisational values and a code of conduct (3.1); a whistleblower policy (3.3) and an anti-bribery and corruption policy (3.4).

These obligations come into force in three months for most listed entities, so there is still time to ensure compliance.

Are you confident that your company will have completed the following by June 30 2020?

 Formally articulated and disclosed its company Values?
 Developed and introduced a Code of Conduct which applies to all employees, executives and board directors?
 Ensured that the Board has considered and approved the company’s Values and Code of Conduct, taking into account the requisite factors?
 Disclosed its whistleblower policy and anti-bribery and corruption policy?
 Set up mechanisms for reporting all material breaches to the Board or a Board committee?

Organisational Values

The Commentary about Recommendation 3.1 states:

“In formulating its values, a listed entity should consider what behaviours are needed from its officers and employees to build long term sustainable value for its security holders.  This includes the need for the entity to preserve and protect its reputation and standing in the community and with key stakeholders, such as customers, employees, suppliers, creditors, law makers and regulators.”

Listed entities are subject to a new requirement to ensure that their organisational values are aligned with business strategy, remuneration structures and delivery of long-term growth.

Code of Conduct

Listed companies must also ensure that they have in place a Code of Conduct ‘to underpin the desired culture within the entity“, which has been considered and approved by the Board.

The Code of Conduct must apply to all employees, senior executives and Board directors, and articulate the standards of behaviour expected. All employees must receive appropriate training on their obligations under the Code. There is detailed guidance in the Principles (4th ed) about what should be included in the Code of Conduct, which we recommend companies check carefully. Many of the existing Codes of Conduct that we have seen would be non-compliant.

Whistleblower, Anti-Corruption and Bribery Policies

Recommendations 3.3 and 3.4 require that a listed entity should have and disclose a whistleblower policy, and an anti-bribery and corruption policy. The Board or a Committee of the Board must be informed of any material incidents reported under those policies.

Board Obligations to Lead a Considered, Ethical Culture

A number of changes to the role and responsibilities of the Board are made in Recommendation 1.1, including the role of the board in “instilling of the entity’s values and performance generally“.

The Board must approve the entity’s statement of values and “code of conduct to underpin the desired culture within the entity“.

Reporting to Board

To enable the Board’s work on organisational culture, the reports from the senior executive team must not be limited to information about the financial performance of the entity, but also include “its compliance with material legal and regulatory requirements” and “any conduct that is materially inconsistent with the values or code of conduct of the entity” (see commentary on Recommendation 1.1).

In our experience, usually the Committee’s Terms of Reference and reporting expectations on executives are clear, however the data collected and records created by complaints-handlers are often insufficient to ensure that information is reported up, or can be analysed over time for trends and opportunities for systemic improvement.

Worklogic Can Help!

Over the last 12 months, since the Principles (4 th ed) were released, Worklogic has supported listed entities to:
Worklogic is currently supportinga number of listed companies to ensure that they are compliant by 30 June 2020. Contact Rose Bryant-SmithJodie Fox or Jason Clark to talk through how we can help.

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