The Australian Securities Exchange (ASX) has decided to dissolve its corporate governance council following a failed attempt to revamp reporting regulations. The council, comprising 19 members from various sectors, faced challenges in achieving consensus, prompting an independent review that deemed its structure unwieldy. Consequently, the ASX will take on the responsibility of formulating guidelines on crucial governance matters moving forward.

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Criticism of the council’s functionality, particularly regarding proposed expansions in diversity reporting for board members, led to calls for reform. The Australian Institute of Company Directors (AICD) endorsed the ASX’s move, highlighting the need for substantial restructuring within the existing framework. This transition presents an opportunity for stakeholders to develop more inclusive governance principles.

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Instead of the council, the ASX plans to establish a secretariat overseen by a smaller advisory group composed of six to ten members. These experts in governance and investment, including directors, investment managers, and superannuation fund chairs, will convene regularly to address emerging governance issues. The advisory group will also conduct formal reviews every four years, departing from the ad hoc approach of the current council.

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Helen Lofthouse, the CEO of ASX, expressed gratitude to those who dedicated their time and expertise to the corporate governance council over the past two decades. The Business Council of Australia welcomed the decision, intending to engage its members in enhancing corporate governance practices. ASX serves as a vital platform for listing, trading, clearing, and settlement services, supporting financial markets with data, analytics, and post-trade services, facilitating capital raising, investment, and risk management.

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Industry experts view this restructuring as a significant step towards improving governance practices within the Australian Securities Exchange. The move signals a shift towards a more streamlined and effective approach to addressing governance challenges and staying ahead of emerging trends in the market.

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As the ASX embarks on this new phase of governance oversight, stakeholders anticipate a more agile and responsive system that can adapt to the evolving landscape of corporate governance. With a focus on expertise and regular reviews, the ASX aims to enhance transparency and accountability in the governance of listed companies, fostering investor confidence and market integrity.

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While the dissolution of the corporate governance council marks a significant change in the ASX’s governance structure, it underscores the exchange’s commitment to upholding high standards of corporate conduct and ensuring robust governance practices in Australia’s financial markets.

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