Direct News Direct News

Direct News

Asian corporate governance

A recent McKinsey survey of 46 private equity investors in Asia has found that investors want more regulation and reform in emerging markets from institutions such as government, local stock exchanges and financial markets. The survey suggests that corporate governance is a Western concept and doesn't always travel well in an environment where companies are mostly dominant by families. In Asia, cronyism and the dominance of family-controlled businesses such as South Korea's conglomerates have been blamed for the lack of meaningful corporate governance. The McKinsey report was released last month at the global corporate governance conference in Japan. The AICD was represented at the conference by CEO John Hall.

Insider trading rules get tougher

The Companies and Securities Advisory Committee (CASAC) has proposed tougher rules on insider trading laws in a discussion paper released last month (available at the ASIC website) that would impose more restrictions on company directors and executives. The proposals include: • expanding the insider trading laws to include all listed entities not just companies; • requiring all company executives not just directors to disclose dealings in the company's securities; and, • disclosures to be made within five days instead of the current 13.

AMP to review disclosure practices

Last month, investor confidence in AMP took a battering when the insurance giant gave a briefing to selected analysts about the downgrading of its profits expectations before it told the market as a whole. This pleased neither the ASX or ASIC which have been urging companies to ensure all shareholders and investors receive the same information at the same time. AMP's Paul Batchelor says the company will review its disclosure procedures.

Corporate governance ratings

Financial ratings company Standard & Poor may establish a system to rate corporate governance practices, says S&P managing director, Chris Dalton. He told a recent business lunch the company was looking at ways to compare levels of corporate governance as well as establishing a benchmark for evaluating the social and environmental performance of different companies.

FRC chairman an FAICD

The Government has announced that Jeffrey Lucy AM, FAICD, the retired managing partner of PricewaterhouseCoopers' Adelaide office will be the new chairman of the Financial Reporting Council, the peak body responsible for the broad oversight for setting accountancy standards for the private and public sectors. AICD president Elizabeth Alexander AM is also on the council.

No business like e-business

Despite the tech wreck, e-business is still high on the agenda of corporate Australia according to a forum conducted by the Business Council of Australia and chaired by ANZ CEO John McFarlane. BCA intends to make e-Transformation one of its top four priorities for 2001. The forum was the result of e-business scorecard assessments of major corporations conducted by Boston Consulting Group. Influencing institutional investors A company's financial performance remains the most important factor influencing investment decisions of institutional investors around the globe, according to a new survey from Russell Reynolds. While CEO performance (71 percent) and a company's valuation (75 percent) are considered important, 94 percent of instos wanted good bottom line numbers. A good board of directors is also climbing up the scale of importance with 69 percent of investors in Australia and the UK ranking the quality of the board as an important factor. Instos overwhelmingly (93 percent) believe that CEO compensation should be directly linked to performance. More than half (55 percent) of investors surveyed chose not to invest in a foreign company because of lax corporate governance standards.

GST headache is only beginning

Companies who rushed into complying with the GST regulation on July 1, 2000 could have sub-optimal systems in place warns Ernst & Young GST expert Carolyn Mall. She says the GST isn't simply a new tax but a process issue that in many instance has been inadequately tested. Last year many companies were struggling to meet the deadline and once the deadline passed there was an assumption that the GST issue was resolved. Mall claims that with the subsequent GST and Tax Office changes, companies are in danger of losing out on cash flow. Companies will continue to take hits on the bottom line unless they improve their GST solutions, she says.

New offshore tax rules?

The Federal Government is reported to be looking at ways in which it can change the tax rules as it affects Australian companies with offshore earnings. The impetus for the change was the announcement by James Hardie that it would move its headquarters to Holland because of the onerous tax rules.

Competition scoreboard

Australia may have beaten the US and China in the gold medal tally at the world swimming championships, but when it comes to world competitiveness we rank 10th according to the latest results from the International Institute for Management Development. However, Australia has improved its position from 11th in 1999. Economic powerhouses such as the US, Singapore, Hong Kong, Luxembourg and Ireland are ahead of us.

New president for New Zealand IoD Norman Geary

A former Shell executive, Barry Dineen is the new president of the New Zealand Institute of Directors replacing Norman Geary who retires after a successful two-year tenure. In a world where the role of director is becoming more exposed and accountable, where shareholders are expecting and indeed demanding that directors perform more transparently, directors of both public and private companies must achieve or be replaced," says Dineen.

Franchising success

Australia is leading the world as the most franchised nation per head of population. Total turnover of all franchise systems in 1998-99 was $76.5 billion according to franchise specialist group n2n. In the 12 months from mid-1998 to mid-1999 4600 new businesses began operations. In the four years to 1999, franchising is estimated to have created 400,000 jobs.

Directors at risk

Criminal liability provisions in the Financial Services Reform Bill could unintentionally expose company directors to negligence claims without them being covered by professional indemnity, according to Baker & McKenzie partner Bill Fuggle. The Bill seeks to introduce new liability provisions that mean would hold directors accountable for committing a crime even when the offending act was an accident. Indemnity policies do not cover directors for criminal acts. In an article in the Australian Financial Review on July 5, Fuggle said the bill introduces a range of strict criminal provisions which "strike at basic principles of civil liberties and undermine directors and corporate insurance structures".

Corporate Code of Conduct

AICD was recently successful in preventing the passage of the Democrats' Corporate Code of Conduct Bill 2000 that would have introduced onerous environmental, employment, health, safety and human rights obligations on Australian companies operating offshore. The Bill would have usurped a foreign government's authority to legislate within its own boundaries appropriate standards of corporate activity. AICD through its CEO John Hall and Ben McLaughlin from the Corporations Law Committee made both written and personal representation to the Parliamentary Joint Committee looking at this issue.

Disclaimer

The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.