Corporate Governance Changes: ASX Approves Overhaul of Principles Process
24 October 2025
The Australian Securities Exchange (ASX) has agreed to assume responsibility for developing, approving and issuing its Corporate Governance Principles and Recommendations, effectively scrapping the long-running Corporate Governance Council.
ASX is now set to implement the recommendations from independent panel review on the process for developing Corporate Governance Principles and Recommendations which were recently published as part of the ASX Corporate Governance Council Review Panel Report. The review panel unanimously recommended that ASX assume ultimate responsibility for furthering the Corporate Governance Principles and Recommendations. It also suggested that ASX create a new advisory group to oversee the drafting and consultation process.
The decision from ASX will essentially see the Corporate Governance Council replaced with the new advisory group. The decision comes after an unsuccessful attempt earlier this year to revamp reporting rules, which included diversity disclosures for boards which were argued as being contentious by some. The review panel was set up in June to consider how ASX should continue to develop and maintain appropriate corporate governance principles and practices for the Australian listed market, including reviewing the work of the Corporate Governance Council members. Established in 2002, the 19-member council comprised businesses, investors and superannuation groups.
“The ASX’s decision to assume direct responsibility for its Corporate Governance Principles marks a shift in how governance standards are set for Australia’s listed companies,” said Thomas Bolger, Senior Stewardship Analyst at Minerva Analytics. “While the move promises greater efficiency and clarity following the challenges faced in approving the 5th edition of the Principles, it also raises questions about transparency and stakeholder representation.
“The aim to create a more agile and attractive environment for companies considering a public listing in Australia is similar to the arguments being made that over-regulation is stifling market competitiveness in the UK and elsewhere,” he added. “The challenge will be to ensure that this drive for competitiveness does not come at the expense of robust governance standards and recognition that sustainability factors can be financially material for companies and investors.”
Helen Lofthouse, CEO of ASX, said that the review panel’s recommendations are “reflective of global best practice and the new advisory group should allow for a more efficient process”. She added that the ASX Corporate Governance Council has “played a critical role in shaping corporate governance practices in Australia for more than two decades” and that she “hope[s] individual members will consider future involvement through the public consultation process that the new advisory group will oversee in respect of any changes to the principles”.
The fifth edition of the ASX Corporate Governance Principles and Recommendations were meant to be published this year, but the ASX Corporate Governance Council halted work on this new version as the group was unable to reach consensus on changes to the Corporate Governance Principles and Recommendations. As a result, the fourth version of the code, published in 2019, remains in effect. The council had released a consultation draft for a proposed fifth edition of the principles in February 2024, but after an “extensive drafting and consultation process, which attracted significant media coverage and debate”, the new version was rejected.
One of the key elements of the proposed fifth edition of the code which saw it fail to gain unanimous support from the council’s 19 members was a requirement for all ASX listed companies to guarantee women board seats and potentially promote employees based on their race, sexuality, disability, economic background or religious beliefs. Business groups, led by lobby group the Business Council of Australia (BCA), reportedly argued the diversity-focused rules were an attempt to force companies into introducing diversity, equity and inclusion policies.
In their response to the consultation published in May 2024, BCA warned that its members were concerned that the principles “create over-regulation” that risked acting to “deter listing and add to the already significant costs of being a listed company in Australia”. Similar high-profile arguments for deregulation to promote market competitiveness and attract have emerged in Europe, the UK and the US.
Trade union-linked superannuation funds represented by the Australian Council of Superannuation Investors (ASCI), which drives companies to increase support for the environment, women and minority races, were one of the primary proponents pushing for the new rules. In May, ASCI published a paper on the financial materiality of sustainability issues which stressed that they are linked to long-term value for shareholders and other stakeholders and that they may manifest in negative investment outcomes, including through governance failures, poor risk management or questionable capital allocation decisions.
ASX has confirmed that it will adopt the recommendations, alongside the release of the review panel report. ASX has opened discussions with potential candidates to act as the inaugural Chair of the new advisory group. Once appointed, the Chair will contribute to the development of a new advisory group charter and will also be actively involved in appointing new members. ASX is targeting the end of this calendar year for advisory group members to be confirmed and an initial meeting called.
The report remarked that the current size of Corporate Governance Council membership and the approach of participants throughout the drafting and consultation process had “appeared to contribute to inefficiencies and ultimately an inability to reach a broad consensus position”. As such, the report recommended that the advisory group should comprise six to ten members possessing governance expertise relevant to issuers, shareholders and investors to “facilitate effective and efficient deliberation”. It additionally suggested that proposed the advisory group be led by an independent Chair, while the members of the group would be appointed in their individual capacity, meaning they would be “expected to act in the interests of the market as a whole rather than represent the views of the industry group or constituency they happen to be drawn from”.
Members of the new advisory group will be selected by ASX from nominations made by relevant peak bodies and other stakeholders reflecting a cross-section of issuers and investors such as: a significant superannuation fund Chair or CEO; an experienced listed company director, ideally with experience in large and small listed entities; an experienced investment manager; an experienced listed company secretary; and a stockbroker with broad expertise.
While the advisory group will effectively replace the Corporate Governance Council, the report urged that input and feedback should be sought from current members and that ASX, through its advisory group and secretariat function, should continue an “effective engagement” with former council members, including sharing and discussing governance updates.
“The panel was unanimous in reaching the conclusion that now is the right time to evolve the current approach to Australia’s corporate governance principles and practices,” said Quentin Digby, who led the review panel. “While we did not have the remit to recommend changes to the principles themselves, we did make an observation that there was strong support for the “if not, why not” approach and the new advisory group would do well to retain this as central to the principles.”
ASX is under mounting pressure, with its shares reportedly plummeting by almost 12.6% so far this year. In June, the Australian Securities and Investments Commission (ASIC) launched an investigation into ASX, saying it and the Reserve Bank of Australia had concerns over its operational viability. The inquiry panel will provide a report to ASIC by 31 March 2026, which will be made public, informing the next steps ASIC may take. The investigation further heightened tensions between ASIC and ASX. This week, ASX’s Chair said that a multi-year turnaround project at the exchange “cannot fail”.
Factors that have contributed to the drop in value of its shares include building products manufacturer James Hardie’s acquisition of sustainable outdoor living products producer Azek likely played a new consultation on extending shareholder approval requirements on transactions following over the decision. Additionally, there are ongoing issues with ASX’s Clearing House Electronic Subregister System (CHESS), with ASIC alleging that ASX engaged in false and misleading conduct and made false or misleading statements in relation to the CHESS replacement project which ran between 2017 and 2022.
Australia’s peak AGM season recently got underway, with the key meetings last year and some of this year’s key shareholder proposals previewed by Minerva Analytics. Keep an eye out for our upcoming briefing on the country’s 2025 proxy season, due to be published in early 2026.
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Last Updated: 24 October 2025