The Corporate Secretaries International Association recently released a research report recommending 20 practical steps for Boards to improve their companies’ corporate governance
Corporate governance is undergoing much
questioning given the serious governance failings
that contributed to and sustained the global financial
crisis. As such, the Corporate Secretaries International
Association, an international organisation whose members
comprise national bodies of professionals at the frontline of
governance, including Chartered Secretaries Australia,
recently commissioned and released a report providing
Board Directors with 20 practical steps for improving their
companies’ governance.
“One of the biggest lessons to come out of the global
financial crisis is that education and a zero tolerance of
wrongdoing at Board level is far more effective than
regulation in curbing corporate misconduct,” said Chartered
Secretaries Australia chief executive Tim Sheehy.
The report, written by Professor Bob Tricker, a world-
renowned corporate governance expert with professorships
at three universities, listed the 20 practical steps for
improving corporate governance as:
1. Recognise that good corporate governance is about the
effectiveness of the governing body – not about
compliance with codes
2. Confirm the leadership role of the Board chairman
3. Check that non-executive directors have the necessary
skills, experience, and courage
4. Consider the calibre of the non-executive directors
5. Review the role and contribution of non-executive
directors
6. Ensure that all directors have a sound understanding of
the company
7. Confirm that the Board’s relationship with executive
management is sound
8. Check that directors can access all the information they
need
9. Consider whether the Board is responsible for
formulating strategy
10. Recognise that the governance of risk is a Board
responsibility
11. Monitor Board performance and pursue opportunities for
improvement
12. Review relations with shareholders — particularly
institutional investors
13. Emphasise that the company does not belong to the
directors
14. Ensure that directors’ remuneration packages are
justifiable and justified
15. Review relations between external auditors and the
company
16. Consider relations with the corporate regulators
17. Develop written Board-level policies covering relations
between the company and the societies it affects
18. Review the company’s attitudes to ethical behaviour
19. Ensure that company secretary’s function is providing
value
20. Consider how corporate secretary’s function might be
developed
“Developments in corporate governance thinking and
practice have often been responses to company collapses,
corporate corruption or the domination of companies by an
individual,” said Tricker, who cited previous research from
the Harvard Business School which found that recent
Boardroom failures differed from the previous corporate
failings.
Enron, WorldCom, and other corporate collapses were
rooted in management malfeasance and fraud, leading to
the US Sarbanes-Oxley Act, Tricker said in the report,
however, he noted the Harvard researchers found that recent
corporate governance problems were primarily attributable
to the growing complexity of the companies that Boards
governed.
“The steps that companies and their Boards could take
towards better corporate governance included recognising
that good corporate governance is about the effectiveness of
the governing body – not about compliance with codes,”
Tricker said.
This process involves reviewing Board processes,
including the Chairman’s leadership role, the balance and
style of the Board, the caliber and contribution of outside
Directors; monitoring the Board’s performance; and
improving Directors’ knowledge of the business and
ensuring they have the information they want, he said.
“Other steps involved ensuring that directors’
remuneration packages are justifiable and justified;
reviewing relations between the company and shareholders,
particularly institutional investors, and with auditors,
regulators, and other stakeholders; and, ensuring that the
company secretarial function is providing value.”
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