ASX Corporate Governance Principles
- Taleen Shamlian
- 3 days ago
- 2 min read
Next week in mid July, we’ll be watching closely for the draft consultation paper on the proposed 5th edition of the ASX Corporate Governance Principles, kicking off an 8-week consultation period.
Stakeholder engagement was one of the “greatest changes” to the draft 5th edition, which was shelved in early 2025, according to former ASX CG Chair Elizabeth Johnstone.
We expect the next version of the Principles to tilt away from stakeholder engagement toward a shareholder-value emphasis, for three reasons:
The ASX Advisory Group’s Charter expects the Principles to drive long-term shareholder value, and ensure that entities are not deterred from listing, among its intended outcomes.
Fund managers are frustrated by the Government’s CGT changes and the superannuation performance test, both of which are dampening ASX returns, according to the AFR;
Investment firms, including Tanarra Capital, have been vocal advocates for shareholders being treated as more valued, respected and trustworthy partners to an organisation.
Even if the pendulum swings towards shareholders, factoring in stakeholder perspectives remains good business practice:
ACSI’s Governance Guidelines treat Social license to Operate and stakeholder engagement as core to a company’s ability to operate and succeed.
The ASA’s paper emphasises getting the balance right between shareholders and stakeholders.
Reputational risk is material — a recent example is Telstra’s share price falling by $2 billion for a $56 billion company with last week’s outage.
NFPs are not immune — they are expected to have consumer advisory bodies or those with lived experience in their decision-making, and many of them are moving to impact analysis.
So is this a tension between shareholder versus stakeholder primacy? At our recent workshop, Ann Sherry challenged this as a false dichotomy:
“It’s not an ‘either/or’, it’s an ‘and’…If shareholder primacy really is your motivation, stakeholder management is how you get there.”