ASX governance principles in practice — study companion

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The eight ASX principles

MODULE 3 | PART D.2 | STUDENT COMPANION

Most recommendations apply on an if not, why not basis: a listed entity either follows each one or explains in its

corporate governance statement why not and what it does instead.

1

Lay solid foundations for management and

oversight

Board charter; diversity objectives; performance evaluations

2 Structure the board to be effective and add value

Majority independent; independent chair who is not the CEO

3

Instil a culture of acting lawfully, ethically and

responsibly

Values, code of conduct, whistleblower and anti-bribery

policies

4 Safeguard the integrity of corporate reports

Audit committee; CEO and CFO declaration

5 Make timely and balanced disclosure

Written disclosure policy; presentations released first

6 Respect the rights of security holders

Investor relations; polls, not a show of hands

7

Recognise and manage risk

Risk committee; yearly framework review; ESG risks

disclosed

8

Remunerate fairly and responsibly

Remuneration committee; separate pay policies; hedging

policy

Did the entity follow the recommendation

this year?

Yes

Say so in the corporate governance statement

No

Is it compulsory under the listing rules or the

law?

Yes Must comply

e.g. All Ordinaries entities need an audit committee; ASX 300

entities must follow its recommended make-up; public

companies must have a whistleblower policy

No

Disclose and explain

Say it wasn't followed, why not, and what the entity

does instead

Investors judge the explanation

And vote or price accordingly

ETHICS & GOVERNANCE | M3 PART D.2 | STUDENT COMPANION

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Committees and a real disclosure

MODULE 3 | PART D.2 | COMMITTEE CHECKLIST

Committee Members Independence Chair If there is none

Nomination 3 or more Majority

independent

Independent

director

Explain succession and skills

processes

Audit 3 or more, all

non-executive

Majority

independent

Independent, not

the board chair

Explain verification processes

(compulsory for All Ordinaries;

ASX 300 must follow the

make-up)

Risk 3 or more Majority

independent

Independent

director

Explain how risk is overseen

Remuneration 3 or more Majority

independent

Independent

director

Explain how pay is set

Real example - Harvey Norman (FY2026 statement). The company disclosed that it does not follow three

recommendations: a majority of independent directors, an independent chair, and the 30% gender

objective for its board. Its executive chairman is not independent (he is not the chief executive), and four of

its nine directors are executives. Its approach to choosing directors weighs significant shareholdings and

an owner's perspective. Disclosure lets each investor judge whether the explanation is convincing.

Other recommendations worth remembering

ASX 300 entities: a board objective of at least 30% of each gender, reached within a set time frame (Rec

1.5).

CEO and CFO declaration before the board approves the financial statements (Rec 4.2).

Polls, not a show of hands, for substantive resolutions (Rec 6.4).

Hedging policy for equity-based pay schemes (Rec 8.3).

Additional recommendations for directors who don't speak the meeting language, and for entities

established outside Australia (Recs 9.1 to 9.3).

Sources: ASX Corporate Governance Council, Principles and Recommendations, 4th edition (2019); ASX Listing Rule 12.7; Harvey

Norman Holdings Ltd Corporate Governance Statement and Appendix 4G (28 August 2026). A new edition of the principles has been

proposed; check which version applies.

ETHICS & GOVERNANCE | M3 PART D.2 | STUDENT COMPANION

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Practice questions

MODULE 3 | PART D.2 | TRY THESE BEFORE THE WORKED ANSWERS

Question 1 - Southern Lights Mining Ltd

Imagine Southern Lights Mining Ltd, a public company in the S&P/ASX 300. Its founder is both executive chair

and chief executive. The board of six also includes the chief financial officer, the chief operating officer, a

non-executive who represents a shareholder holding 19%, and two independent non-executives. The audit

committee is the three non-executives, chaired by the shareholder representative. There is no risk committee

and no description of how risk is overseen, no whistleblower policy, and AGM resolutions are decided by a show

of hands. Identify each departure from the recommendations and say what the company must do about it.

Question 2 - which principle?

Write the principle number (1 to 8) beside each practice.

Practice No. Practice No.

(a) Publishing a board skills matrix (e) A yearly review of the risk framework

(b) CEO and CFO declaration on the

accounts

(f) Measurable gender diversity objectives

(c) Releasing a new investor presentation first (g) Deciding resolutions by poll

(d) A ban on hedging unvested executive

shares

(h) A policy against bribery and corruption

ETHICS & GOVERNANCE | M3 PART D.2 | STUDENT COMPANION

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Worked answers

MODULE 3 | PART D.2 | WORKED ANSWERS - ATTEMPT THE QUESTIONS FIRST

Question 1 - Southern Lights Mining Ltd

Departure Recommendation What the company must do

Only two of six directors are

independent

2.4 majority independent Disclose and explain, or appoint more independent

directors

Chair is an executive and also

the CEO

2.5 independent chair,

not the CEO

Disclose and explain, or separate the roles

Audit committee chaired by a

non-independent director

4.1 independent

committee chair

Must fix: as an S&P/ASX 300 entity, the listing rules

require the recommended audit committee make-up

No risk committee and no

explanation

7.1 risk committee or

explain

Form a committee, or disclose the processes it uses

instead

No whistleblower policy 3.3 whistleblower policy Must adopt one: the law requires public companies

to have a whistleblower policy

Show of hands at the AGM 6.4 decide by poll Disclose and explain; better practice is to move to

polls

Key insight: most departures can be explained, but two here cannot. The audit committee make-up is

compulsory under Listing Rule 12.7 for S&P/ASX 300 entities, and a whistleblower policy is a legal

requirement for public companies.

Question 2

(a) 2 | (b) 4 | (c) 5 | (d) 8 | (e) 7 | (f) 1 | (g) 6 | (h) 3

ETHICS & GOVERNANCE | M3 PART D.2 | WORKED ANSWERS

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