Legal and Governance

Change is on the horizon

With the release of the Final Report of the Financial Services Royal Commission, the APRA review of CBA and the ASX Corporate Governance Council considering changes to its Corporate Governance Principles, Governance and directors’ duties are front and centre for directors, investors, regulators and the community. As a result, all stakeholders are reassessing just what is “good governance” and what is the proper exercise of duty by directors.
 
It is clear that boards can no longer prioritise the needs and demands of shareholders when considering how to exercise their duties, particularly the demands of shareholders for returns over the short term in priority to the longer term interests of the corporation. Instead, there is a increasing emphasis on the need for corporations to earn and maintain a social licence to operate – and protect the long-term interests of the corporation by having regard to the interests of all stakeholders, not just shareholders. The challenge for boards in this environment is how to balance the demand for short term financial returns with the need to broaden the focus from short-term financial performance to preserving their social licence and meeting community expectations.
 
Boards also now have to oversee a more diverse portfolio of risks, with balance sheet considerations sitting alongside a plethora of other risks including strategic, technology, reputational and regulatory risks. As the role and responsibilities of Australian boards evolve, companies and their directors are being held to greater account in the public arena for their decisions and the outcomes. And in this context, directors should be considering not just the seismic economic, political and social shifts that impact their roles and responsibilities, but also the underlying impact on their personal liability.
 

Contact us

Peter van Dongen

Chairman, Board of Partners, PwC Australia

Tel: +61 2 8266 3378

Mark Pistilli

Partner, PwC Australia

Tel: +61 2 8266 1684

Karen Evans-Cullen

Partner, PwC Australia

Tel: +61 2 8266 1310

Ashley Poke

Partner, PwC Australia

Tel: +61 3 8603 2158

Mike Codling

Partner, PwC Australia

Tel: 612 8266 3034

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