(i) Separate legal entity (i) Sec 112 Liability [Proprietary / public companies]

Types of companies (ii) Limited liability (ii) Sec 113

(iii) Perpetual succession (iii) ASX

(i) its own property

Separate legal entity (ii) separate management
(iii) ability to act like a person - (a) the capacity to sue and be sued (b) ability to enter into contracts
Limited liability (i) where a limit is put on the level of liability a member must pay to satisfy outstanding liabilities
(i) exist forever
Perpetual succession (ii) does not cease
(iii) Only cease upon winding up

- consolidated gross operating revenue for the financial year of the company and the entities it controls is < (less than) $25 million Criteria for proprietary companies
- consolidated gross assets at the end of the financial year of the company and the entities it controls is < (less than) 12.5 million
- The company and the entities it controls have < (less than) 50 employees at the end of the financial year (Small or Large criteria - S113)

(i) Limited by shares

Proprietary companies
(ii) Unlimited with share capital Sec 112 Companies Act 2001
(iii) Unlisted
(i) Private or proprietary companies (pty) cannot solicit investment from the public
(ii) Can be limited by shares (pty ltd) or unlimited but has a share capital
Sec 113
(iii) Cannot be limited by guarantee
(iv) members - 1 to 50 non employee shareholders
(i) Limited by shares
(ii) Limited by guarantee
(iii) Unlimited with share capital Sec 112 Companies Act 2001
Public companies (iv) No Liability company
(v) Listed in stock exchange or Unlisted
(i) Not restricted in respect of shareholders
Sec 113
(ii) Have more onero.us obligations
(i) Limited (a) Shares Ltd (b) Guarantee (public only) Ltd
Sec 112 Liability - Type of
(ii) Unlimited (can be public, proprietary, partnerships) - must have share capital from 1998
companies
(iii) No liability (mining only) *NL
Small = satisfy 2 of the 3 criteria for proprietary
(i) Public
Sec 113 - Type of companies.
(ii) Proprietary --> Small (s45A(2))
companies Large = NOT satisfy at least 2 of the 3 criteria for
or Private (pty) ---> Large (s45A(3))
proprietary companies.
(i) Listed
ASX - Type of companies
(ii) Unlisted
 (i) Involves a set of principal adopted to ensure corporate direction, responsibility and accountability; affect all those who manage.
(ii) Such principal may be embodied in both statutory and common law rules
(iii) A set of relationships between management, its board, its shareholders and other stakeholders. It determines the direction and
Definition and Scope
performance of the company. (OECD, 2004)
(iv) The corporation is fundamentally governed by a board of directors overseeing top management with concurrence of shareholders.
OECD 2004
(v) The rules and practices put in place to manage information and economic incentives problems inherent in the separation of ownership
CLERP 1997
and control. It deals with how and to what extent the interest of various agents are reconciled, with the necessary checks and balances to
HIH Royal Commission 2003
maximize the value of the organization. (CLERP 1997)
(vi) At is broadest, it comprehends a framework of rules, relationship, systems and processes within and by which authority is exercised
and controlled in corporations. (HIH Royal Commission 2003)

- Market globalization
- advances of technology
- competition of performance and investment funds
- accessibility of information
- sophistication of investors Need for Improvements
- shareholder activism (e.g. active retirement financing etc)
Corporate Governance - growth of small shareholder ownerships
- other factors such as Asian economic crisis, corporate collapses and a general public demand for greater transparency and
accountability.
Following Enron sweeping changes include the Sarbanes-Oxley Act in the US, the combined Code with Higgs and Smith's reports in UK
and the IFAC Research Report.
- OECD guidelines (2004)
- Bosch (1991) and Cadbury (1992) Committees
- Greenbury (1995) and Hampel (1998)
Development in corporate governance
- The combined Code (with Turnbull) 2005 combining Higgs (2003) and Smith (2003)
- CalPERS and Business Roundtable (BRT)
- APEC, World Bank and IMF
- IASB
- Australian Standard AS8000

- objective of the OECD principles is to assist governments in evaluating and improving the legal, institutional regulatory framework,
providing guidance and suggestions for stock exchanges, investors, corporation to develop good corporate governance.
-corporate governance gives the investor confidence to invest and remain loyal to the company Principles of effective corporate governance
- Control and ownership are separated.

- increased regulation: compliance (non compliance); increased cost, opportunity cost of risk aversion
- Management compensation: performance based remuneration - share price maximization; profitability maximization; stock options and
accounting treatment; disclosure Impact of corporate governance on agency costs
- guidelines on executive compensation
- performance based compensation: an alternative view
Function of the board, composition and structure, chair, membership and terms, remuneration, financial reporting and auditing, risks and
Bosch (Australia) Global focus on corporate governance
internal controls and codes of conducts.

Cadbury (UK) checks and balances for board, non-executive directors, audit committees and disclosure of corporate governance procedures. Global focus on corporate governance

IFAC (2003) Stressed the need for greater emphasis on responsibilities of management, financial management and controls, and ethical codes. Global focus on corporate governance
 Greenbury Directors' remunerations, transparency and disclosure, remuneration committees to be formed. Global focus on corporate governance
Emphasized balance between accountability and prosperity; key principles for the board, financial reporting and audit adopted as the super
Global focus on corporate governance
code in the Listing Rules.
Hampel Report specifically deal with non shareholders stakeholders' role. This issue of conflict of interest is noted. Stakeholders
Hampel 1998:
- supports the establishment of audit committee comprising mainly of non executive directors except where impractical
- audit independence (limited to 10% income reliant)
Hampel
- mechanism to disclose, on request, voting practices
- shareholders provided with timely papers better AGM and resume of discussions at the AGM The board - Hampel 1998
- role of executive vs. independent non executive
- board performance assessment
- specific criteria for nomination, appointment and training
- Remuneration committee
together with Cadbury and Hampel with 18 principles and 48 code provisions, at least one third non-executive directors, minimum of 3.
Global focus on corporate governance
The Turnbull report broadened the Combined Code with internal controls and risk management compliance.
Dialogue with institutional shareholders and constructive use of the AGM Relations between directors and shareholders
No specific provisions relating to stakeholders Stakeholders
- Dialogue with companies with mutual understanding
- evaluation of governance disclosures Institutional shareholders
- shareholder voting
- Role - entrepreneurial leadership within a framework of prudent and effective controls; set values and standards
- clear division of responsibilities
Combined Code - balance and independence
- formal, rigorous and transparent appointment procedures
- supplied with timely information
- receive induction and regular update of skills and knowledge
- performance evaluation The board - The combined code 2003
- re-election subject to continued satisfactory performance
- structure remuneration to retain and motivate directors and link with corporate and individual performance
- formal and transparent procedures for remuneration
- financial reporting - balanced and understandable assessment
- effective internal controls
- formal and transparent arrangements for audit committees and auditors to apply financial reporting principles.

On non-executive directors, Audit Committees, and recommendations include chairs not to be involved in remuneration of the chair,, half
Higgs/ Smith/ and the FRC Global focus on corporate governance
of the board comprise independent non-executive directors, annual meetings of non-executive without the presence of the chair.

1) Basic for effective corporate governance framework

2) Rights of shareholders and key ownership functions
3) Equitable treatment of shareholders
4) Role of stakeholders in corporate governance
5) Disclosure and transparency
6) the responsibilities of the board

- objective of the OECD principles is to assist governments in evaluating and improving the legal, institutional regulatory framework,
providing guidance and suggestions for stock exchanges, investors, corporation to develop good corporate governance. Principles of effective corporate governance
 1) protect shareholders' rights:
- further than influencing board at GM via voting, comment on charges
-sell stocks
- vote by proxy
-bring suit for damages if directors fail
-obtain certain information from company
-exercise residual rights following liquidation

2) Major shareholders should:

- engage in dialogue with company
OECD 2004 -give due weight to all relevant factors
shareholders: key OCED principles
-be more aware of commercial considerations
- Annual general meeting (AGM) is used to communicate

3) equitable treatment of all shareholders

-Equality of treatment
-Provision of timely and accurate information
- Abolition of insider trading
- Disclosure of material interests by directors and offices, and abusive self-dealing

The OECD does not limit the term stakeholders. Employees are a particular important stakeholder.

OECD Section 111

- particular attention to employees
- Recognize stakeholder contributions
- Foster wealth creating co operation among stakeholders
- Rights of stakeholders protected by law Stakeholders - OECD Section 111
- Should have opportunity to obtain redress for violation
- Permit performance enhancing mechanisms for stakeholder participation
- Where stakeholders participate in the corporate governance process, the should have access to relevant information

" The corporate governance framework ensures the strategic guidance of the company, effective monitoring of management by the board
and the board's accountability to the company and the shareholders." OECD 1999, p9
The Board
OECD framework specifies forms of guidance and oversight to management and accountability to shareholders and society at large:
Transparency and disclosure.
AS8001 - Fraud and Corruption Control
1) Good governance principles - AS8000 this follows the board principles of OECD, with the role and responsibility of the board, disclosure AS8002 - Organizational codes and conduct
Australian Standard AS8000
and transparency obligations, the rights and equitable treatment of shareholders and stakeholders etc. AS8003 - Corporate Social Responsibility
AS8004 - Whistleblower protection programs
(i) Requires listed companies to disclose the main corporate governance practices in annual reports.
(ii) proposed continuous disclosure
(iii) Support for the establishment of audit committees
(iv) Propose disclosure of audit firm appointment, dates of rotation of audit engagement partners
(v) Increase disclosure of share option schemes and auditor fees
 Principle 6 empower shareholders by
Shareholders
- Communicating effectively with them
- Giving them ready access to balanced and understandable information about the company and its corporate proposals
ASX Principles (Aug 2007)
- Making it easy for them to participate in general meetings
Principle 3 Recognize legitimate interests of stakeholders
ASX Guideline - Recognize legal and other obligations to legitimate stakeholders
Stakeholders
- Legal obligations to stakeholders including employees, clients, customers, community as a whole
- Commitment to acceptable practices to create value by better managing resources and capital
- laid solid foundations for management and oversight
- structure to add value
- promote ethical and responsible decision making
- safeguard integrity in financial reporting
ASX 2007
- make timely and balanced disclosure
- respect the rights of shareholders
- recognize and manage risk
- remunerate fairly and responsibly
Has a role to promote awareness and adoption of improved corporate governance. E.g. disclosure of tax effect reconciliation notes to the
Australian Taxation Office
accounts.
ATO implements major tax reform, imposing greater responsibility for organization to manage and control resources effectively.
Australian Competition and
Administer the Trade Practices Act 1974, advancing economic policy
Consumer Commission
(E.g. Promote good trade practices: Label of drugs etc.)
(ACCC)

- Makes laws restructure and liabilities of companies administrative bodies, and policies re taxation systems.
- Require companies to behave responsibly and be accountable as good citizens
- Enable new laws to be made from voting systems
Government Lobbying by organizations and groups may result in discussions and changes to the law The role of Government in corporate governance
- Economic theory of free market: businesses operating in a free market will ultimately allocate scarce resources efficiently = deregulation.
- Companies operating in competition will produce winners and losers and will exploit society= regulation
- arguments for regulation versus deregulation.

- accountable to shareholders
-delegate powers to management
-oversees management on behalf of shareholders
-stewardship function participants of corporate governance
-responsibilities distinct from management: i) formulate strategy ii) develop policy iii) appoint/supervise/remunerate management iv)
ensure accountability
- comprises executive and non executive
- Roles and responsibilities discussed in OECD, Hampel, BRT, AICD and the commonwealth association of corporate governance. Roles
underpin corporate governance.

- Board's extent of involvement in the development of strategic direction debated. A continuum form phantom participation to being an
Board active catalyst (change agent) recommended by Wheelen and Hunger (2000).
 1) conformance:
- ensure integrity of reporting (accounting, financial reporting, auditing)
- ensure appropriate controls in place to monitor risk, financial control and compliance
- monitor effectiveness of governance process
- oversees disclosure and communication processes
2) Performance: Board responsibilities - literature
- corporate strategy, guiding, reviewing, setting overall direction, objectives, monitor implementation, oversee major expenditures/
divestitures
- selecting, compensating, monitoring, key executives succession planning, etc.
- reviewing key executive and board remuneration, formal and transparent board nomination process.
manage overall relationships
- owners of company
-individual and institutional participants of corporate governance
- purpose of the firm: Milton Friedman's shareholders' value maximization and Keasey et al's long term wellbeing
- participation (attend general meeting)
- voting Duties
Shareholders -availing themselves of particular common law or statutory rights
- sell stocks
-vote by proxy
-bring law suit for damages Rights
-obtain certain information from the company
-obtain certain residual rights upon liquidation
- the wider business and social community which have a stake in efficient running of company (direct or indirect)
participants of corporate governance
- employees, customers, suppliers, trading partners, government and community.
- Interested parties such as employees, creditors, customers, suppliers, non equity investors, regulators and government
Stakeholders
Supported by Hampel (1998) "Good governance… take constituencies into account can prevent fraud and malpractice.." Hampel
Business round table suggests that the board's primary duty is to the shareholders and should take into stakeholders' interests to the
BRT
extent that the enhances shareholder value (a derivative duty)
Commonwealth association corporate governance guidelines 1999:
- leadership
- appointment
- strategy and value
- compliance
- accountability to shareholders
- balance of powers
- company performance assessment
CACG The board responsibilities
- communication
- relationship with stakeholders
- internal procedures
- board performance assessment
- management appointments and development
- technology
- risk management
- insolvency review
 - Accountability and transparency require companies to function within certain rules and regulations.
- Board no longer just accountable to shareholders but to wider community
- Formation of board committees is a means of strengthening the independence and accountability of the board
- board committees are subsets of the overall board
- benefits: 1) utilize board experts 2) recognize geographic and time limitations 3) free up full board agenda to focus on strategic issues

Accountability - corner stone of corporate governance

- accountability to shareholders, institutional lenders and employees, creditors and regulators
- voluntary disclosure - public information, risks etc.
- improving disclosure : new technology offers opportunities for increased disclosure. Accessibility, frequency and content of information
will improve individual shareholders' access, evaluation of performance etc.
- non financial information is forward looking and may bear higher risks because of their non verifiable nature
- international standards increase with globalization and competition for capital.

- a sub-committee of the board comprising a majority of independent and non executive members. Provides an independent forum where
issues relating to financial reporting and audit can be referred to on a timely basis, thereby strengthening the auditor's independence.
- primary role: oversight of the financial reporting and auditing process
- The ASX principle 4 requires: non executive directors; a majority of independent directs, an independent chair who is not a chair person
of the body and at least 3 members.
- should have a formal charter to be disclosed in the company webpage.
- Companies without an audit committee should have broad processes in place which raise the issues that would other wise be
considered by the audit committee.

Audit Committee - ASX corporate governance council published 10 corporate governance principles and recommended best practice. Principle 4:
safeguard integrity in financial reporting.
- Recommendations include CEO and CFO to certify accounts, requires the establishment of an audit committee the structure of which
consists of only non executive directs, a majority of independent directs, and independent chair (no the chair of the board) and at least 3
members.
Latest development
- Audit committee should include members who are financially literate, with at least one member who has financial expertise. Formal
charter also required.
- The role of audit committee should include: assessing external reporting and its process, selection and appointment of external auditors,
performance of external auditor re independence, assessment of the performance and objectivity of internal auditors.
- NYSE requires that listed companies must have a qualified and independent audit committee, its chair must have accounting expertise.

- Concerns on senior management compensations; earnings management and audit independence

- Both CEO and CFO to certify fairly presented financial reports and other information in all material aspects of operations and financial
conditions by
(i) Indicate personally reviewed quarterly reports
Sarbanes Oxley Act 2002
(ii) stating report does not contain untrue statements to their knowledge
(iii) stating financial report fairly present in all materials aspects the financial condition and results of the company
(iv) stating that they are responsible for internal controls; designed such controls to ensure all material information were made known to
them; have evaluated the internal controls
- Review and make recommendations of remuneration for the CEO and senior management
Remuneration/ - independent advice sought on current trends
compensation committee - consideration of employee benefits, succession planning of senior management
principally comprised of non executive directors
 - consider the processes of the board
- consider and recommend potential board appointments
Nomination committee
- consider removal and retirement of board members, succession planning
- may extend to consider the performance and processes of the board and remuneration of non executive directors and management

- Failure to identify, manage or mitigate risk where possible is a governance failure

Risk management - ASX principle 7 states that companies should establish policies for the oversight and management of material business risks and
committee disclose a summary of those policies.
- recommendation 7.2 suggests a separate and dedicated board committee is desirable.
- utilization of particular board expertise
- recognition of geographic and time limitations
- freeing up the full board agenda to concentrate on strategic issues
Committee Structure Benefits
* Delegation to committees does not relieve the board's collective duties, or individual members' duties
* some argue that dilution of overall accountability may result in delegation of responsibility
- Explains management choices and actions
- separation of ownership and management
- agency relationship: a contract under which one or more persons (principals) engage another persons (agents) to perform some service
Agency Theory on their behalf, delegating some decision- making authority to the agent. conflict of interest
- Shareholders have limited access to the information by which management is assessed.
- assumptions: * individual self interests - maximization of own benefit * Agents are in position of access and control of information
(information asymmetry)
- good corporate governance aligns directors' and shareholders' interest
- agency costs equate to the reduction of wealth experienced by the principal as a result of self interest opportunistic behavior of
management and directors.
- 3 types of agency cost: (i) Bonding (ii) Monitoring (iii) Residual loss
Agency Cost
(i) Bonding cost: cost of bonding by agent to principal to self imposed disciplines such as internal audit, voluntary reporting, delegated
Bonding Cost
authorities.
(ii) Monitoring costs: cost of monitoring agents' actions. E.g. external audit, management compensation plan Monitoring cost
(iii) Residual loss of value to a firm when agents' interest will not align with principal's through opportunistic behavior. Residual loss
1) Management compensation includes performance based remuneration, stock options and bonus plans
2) Compensation plans are to reduce agency costs, maximize performance and subsequently shareholder value
3) shareholders' wealth in the form of share price and company profits are the measure of management performance. There are
Agency Cost - Reduction advantages and disadvantages. compensation plans / Share prices / Profitability
4) Maximizing share price reflects shareholders' interests but market or industry influence is outside agents' controls.
5) profitability has the advantages of being measureable, directly related to management effort, and sometimes can be independent of
market conditions; but there is subjectivity of profit measurement.
 Stock Options:
- Right for managers to purchase shares
- Managers become shareholders and are remunerated, thereby maximizing shareholder values
- Value of option not recorded hence compensation to manager understated
- do not penalize the managers if price fell hence do not eliminate opportunistic behavior
- Dilute the proportionate holdings of current shareholders.

Stock option might encourage a short term focus on share price. Greenspan of Federal Reserve in the US expressed concern about the
widening gap o fa company's long term value and remuneration packages.
Stock Option - Pro & Cons
Accounting treatment of stock options are debated upon because of its relationship with corporate collapses because the proportion of
equity based remuneration as a percentage of the total salary for executives are on a rise.
Agency Cost - Stock Options Greenspan of Federal Reserve
- An exclusion of the cost of options from the financial statements understate the salary costs and provide an opportunity to influence the
results of the company. Opponents regard expensing treatment being complex.
Accounting Treatment - AASB 1046 / CA2001
- Expensing stock options will increase transparency and leading to reduced profits, and companies are more cautious in deciding how
stock options should be structured and distributed. (AASB 1046 referred)

CA2001 requires companies to disclose remuneration of executives in aggregates only.

Disclose of stock options under CA2001 and AASBs ( AASB 1046)

- principally require disclosure of aggregate amounts, together with the number of individuals which fall within nominated bands of income.
- AASB 1046 proposes that specified executives be individually named and that each component of their remuneration, including equity
compensation be disclosed.
- Details : number of options granted/ vested; particular terms of each grant.
- commonly used with reported earning but reporting profit is a function of accounting numbers and accounting choices.
- reported profit figure may be real or cosmetic
- where profits does not reach the lower level, incentive to choose. E.g. provision to allow lowest possible results, thus enhancing future
Agency Cost - Bonus Plans
years' profits (taking a bath)
- where profits lie between the lower and upper levels, use of accounting choices to maximize profits
- where profits will exceed upper bound, incentive to reduce profits.
Opportunistic behavior includes:
- Overconsumption of perks -> more benefits than necessary - travel by business class
- Empire building - security in company - relatives/ my people > influence
- Risk Avoidance - low expectation from shareholders
- manipulating differential in time horizon between agents and principals - bonus based on performance *exceed expectation, do not report
excess profit at bench marks
Agency Cost -
Implications: Implication of Opportunistic Behavior of Agents.
Opportunistic Behavior
1) increasing role of accounting
- Main indicators of performance
- Driver of share price and shareholders' wealth
- managers' ability to make decision which result in accounting numbers and wealth creation

2) Opportunistic behavior may result in wealth transferred from shareholders to agents. contracting and engaging agents with good moral
behavior may constrain self serving motivations.
 1) A method of improving company performance through
- motivating and retaining key employees
- attracting quality management and
- allowing executives to share in the reward of success

2) Basic Principles
- reasonable remuneration and comparable to the market
- individual elements clearly identified and disclosed
Agency Cost- Executive
- incentive schemes reward superior future performance and linked to appropriate benchmarks
Compensation Guidelines - transparency, accountability and fairness essential in designing and disclosing incentive schemes
Performance based compensation - alternative view
- Extrinsic rewards may induce temporary compliance and do not achieve overall objectives.
- stifling innovation, focusing efforts on the short term at the expense of the long term
- discourage risk taking Performance based compensation - alternative view
- explicit incentive plans result in employees only performing to the level required to achieve desired rewards
- may lead to active manipulation of the reported measures
- may fail to understand what employees require for job satisfaction
- Threat of takeovers
- Shareholder/ Stakeholder activism
Agency Cost - Conflict - Australian shareholders' association information
minimizing factor - The role of AGM
- Corporate governance rating agencies
- Role of media
- Clarify expectations of statutory authorities issuing Statement of Expectations
- Reenforce the role of portfolio departments
- Governance board to be utilized
- Establish inspector general of regulation (Accounting of Audit committee in HK)
- A central group to advise on the application of governance
- Financial frameworks to be applied
- Statements to be include value central to the success of the authority
Uhrig Recommendations
Summary of better practice guidance:
*Board size
*Using committees as a useful mechanism
*Experiences of board members
*responsibility of ministers
*maximum board service to allow for rotation
*Board orientation and professional development
*Annual assessment of board performance
 - Directors, individually and as a board, bear the primary duty to carry out the corporate governance policies
- Officers may bear governance type responsibilities
- the court examines in detail whether the consequence of action carried out by officers/ directors are that of the company's
- company will be bound by actions where: constitution authorizes to act on its behalf, when members vote and where company has
delegated power to certain people, and who then act within that power
- Issues for the court: examine authority, constitution, and specific legal obligation to impose authority on the person.
- Justice Rogers in the AWA case : role of CEO to be informed, executive directors and non executive directors' should bear the same The role of Directors
standards of care, and should be subjected to the same duty.
- Company as a legal person and separate from the action of natural person - law recognizes agency and trustee law but the director is the
common element
- all companies must have at least one director. A proprietary company must have no less than one director ordinarily resident in Australia
and a public company must have at least 3, 2 of which must ordinarily reside in Australia.
- Directors must sign in consent to act as directors, and upon appointment are subject to range of obligations.

To whom is the duty owed?

- Company
- Coursts decide it was not the commercial entity but the shareholders as a general body or to shareholders in case of takeover.
Director - To whom is the duty owed?
Director cannot act in favor of one party (employees), can take into account interests of community at large or the advancement of the
company's position on significant issues.

Nominee directors - appointed to represent a 3rd party but should not put the interest of 3rd party ahead of the company.
Director
Definition by Statute:
- A director is (s.9)
a. "de jure" director or a person who is appointed to the position of direct or alternate and acting in that capacity. Definition by Statute
B. "de facto" director or a person not validly appointed, but act in the position; or "shadow directors" - the directors or company are
accustomed to act in accordance with the person's instructions, regardless of the name; except those in professional capacity/ relationship

Statutory duty of good faith:

- s181(1) directors/ officers exercise powers/ discharge duties in good faith (best interests..) and for a proper purpose = Civil
Statutory duty of good faith:
- s184 criminal penalty for intentionally dishonest or reckless breach of duties ($200,000 + 5 years imprisonment) s181(1) / S184

- Objective assessment by parliament

* Employee caused foreign exchange transaction losses by unsuccessful trading and borrowing
* Auditors were sued for negligence in failing to detect the illegal activities and auditors claimed company to be blamed for inadequate
internal controls
*Justice CJ rogers found
- CEO failed to respond - personally liable
AWA on the roles of directors
- Board had little knowledge of the operations
- Board failed to ensure policies observed
- Internal auditors/ managers failed to adequately inform board
- Standards to be imposed on directors, whether executive or non executive
- Directors can be sued for negligence
- Historical concept of deed of settlement companies which were managed by trustee and on behalf of investors of funds.
- Fiduciary duties owed to beneficiaries imposed by equity upon a trustee include wide ranging obligations of honesty.
Corporation Law
- Legislation were passed in UK to regulate administrative companies by the companies act of the 19C: the "Bubble companies" Act 1825
and subsequent legislation formed the basis of the Corporations Law in Australia
 General Law Duties
Director Duties and
- Common law and equitable duties are together referred to as general duties which include:
Responsibilities

i) To act bona fide in the best interests of the company General Law Duties (common law and equitable)
ii) To exercise powers for their proper purposes
iii) To retain their discretionary powers
iv) To avoid conflicts of interests
v) to act with care, skill and diligence (Statutory duty, not a fiduciary duty)
Bona Fide in the best interests of company:

- in good faith, honestly, without fraud or collusion

Director Duties and - subjective test - directors' consideration to be in the best interest of company
Responsibilities - - common sense approach - onus on accuser to prove against director
(i)
Bona Fide
Bona Fide in the best Must be:
interest of company - honest belief by directors
- in the best interest of the company
- good business judgment
- directors behave honestly
- sectional interests not supported
Duty to exercise powers for proper purposes:

- Directors required to exercise powers for the purpose for which they were conferred. Duty to exercise powers for proper purposes
- A power granted for impermissible reason renders the action void
- Objective test is applied, even directors honestly believed the action is the best interest of the company.
An improper purpose includes a purpose which was illegal or contrary to public policy or directors maintain their own power.
Improper purpose
Director Duties and Courts decide if (1) the director was purporting to exercise a power they never had, or (2) the action waws prima facie within the power but
Responsibilities - was invalid because of the abuse arising from improper purpose
(ii)
Duty to exercise power for Statutory duty for a proper purpose from s 181(1):
proper purposes
- Takeovers:
*Honest action in good faith but fro an improper purpose not allowed
*Act in the best interest of a company as a whole and maximize value of share as a defensive action allowed S181(1) - Statutory duty for a proper purpose
*Ratification by general meeting allowed
*Defense: correct interpretation the purpose of power, honest belief the action fulfill the purpose, and be in the best interest of the company.

- Court deems it improper a purpose to manipulate control within the company. e.g. create or destroy majority voting power.
 - Board must not delegate discretion without express authority, nor can they simply accept the direction of others in voting.

- Discretion means that obligation not to bind or fetter their vote on matters at some future time. This is because powers are held in trust
for the company. Director should not delegate such power even there is no improper purpose.

- This does not involve the board acting with authority to accept a business proposition which requires the commitment to pass resolutions

- Contracts to fetter the voting rights at a board meeting are invalid except for nominee directors

Director Duties and

Responsibilities - - S 187 allows nominee directors of wholly owned subsidiary company, acting on behalf of the parent company to vote according to the
(iii) appointer's request.
Duty to retain discretion
S187
- Delegation is allowed, but not delegation out of the hands of the board. e.g. committees, s198D, and must be recorded in minutes
s198D
- Conferring powers to a managing director is allowed.
s190
- Responsibility lies with the director who delegates, except where the director believes that the delegate would exercise the power in
conformity with the duties under CA2001 or Constitution; and the director believed on reasonable grounds and in good faith and after
s189
enquiry, that the delegate is competent and reliable in relations to the power delegated (s190)

- Directors can rely on delegates. S189 - a director can rely in good faith and after making independent assessment

- Fiduciaries should not place themselves in a position where there is an actual or potential conflict between personal interests and the
duty to company.

- Conflict of interest include:

* Contracts with the company
* Personal profits
*Competing with the company

Avoiding Conflict: Contracts with the company

- Conflict of interest arises where a director has personal interest in a contract to which the company is also a party. Only defense is the
company is fully informed and consented to the transaction in full knowledge of the circumstances.
Avoiding conflicts : Contracts with the company
- No enquiry is permitted even if the terms of transaction are not dissimilar without the conflict of interest.
s191(1)
s191(1) requires a director who has material personal interest in a matter must give the other directors notice of the interest unless they
fall within s191(2)'s list: directors' remuneration, guarantor of a loan to the company, or where directors are already aware of such interest.
s191(2)
- Standing notice may be given : in writing, with details of the nature and extent of the interest and the relation of the interest to the
company.

- Common law does not make distinction between directors of public and proprietary companies but s 191 does not apply to proprietary
companies with one director. Relief from notice if other directors are aware of the fact.
 Director Duties and Avoiding conflicts: Personal or secret profits
Responsibilities -
(iv) Examples:
Duty to avoid conflict of * Bribe
interest * Undisclosed benefits
* Misuse of company's funds
* taking up corporate opportunities Avoiding conflicts: Personal or secret profits
* use of confidential information
* improper use of position in the company

- Duty is not to profit from office, not only to act in good faith, but to be seen to act in good faith.

- Does not matter if the company suffers no loss, as long as the directors receive personal gains while in management role.

Avoiding conflicts: Competing with the company

- Fiduciaries are not allowed to enter into competition with those who are dependent upon them.

- Non executive directors are not restricted from joining the board of a rival company, subject to them complying with all fiduciary duties.

- A director cannot use any information belonging to the company to their own advantage, executive or non executive
Avoiding conflicts: competition with the company
- A service agreement is entered into by executive directors for exclusive service.

Others:
* Payments to directors
* Disclosure of remuneration
* Related party transactions.

- not a fiduciary duty. Director is expected to run a business aimed at making profit and can take risks.

- Formerly only three principles from city Equitable Fire 1925:

i) Not greater skill required, reasonable skill and knowledge
ii) not to give continuous attention to the affairs and not required to attend all meetings but as often as they reasonably can Principles from City Equitable Fire 1925
iii) Justified in trusting officers in performing their duties, not liable for officers' misdeeds
AWA
- AWA now imposed much higher expectations:
S180
- S180: a director must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person
would exercise if they were director, or occupied such office as director. This s an objective "reasonable person" test. Civil penalty if S588G - prevent insolvent trading
breached without dishonesty.

- Duty to prevent insolvent trading s588G. A director has a duty to satisfy himself that the company is not insolvent at the time of debt is
incurred.
 Duty to prevent insolvent trading (s588G1A)

Principles:
- A statutory duty and a fiduciary duty under obligations to exercise care, skill and diligence owed by directors to present and future
creditors.
- Director should constantly keep on guard so as not to incur further debt when current financial instability could lead to the new debt not Duty to prevent insolvent trading
able to be met.
- Directors are required to keep themselves informed about the financial position of the company. s588g1a

Duty to prevent the company from trading whilst insolvent, i.e. Company is not insolvent while debt is incurred.

On directors (extending meaning under s.9 applies)

Director Duties and

Responsibilities - Directors will be personally liable if:
(v)
To act with care, skill and - person is a director ( or deemed to be director) when the debt is incurred;
diligence - company was insolvent or became insolvent by incurring the debt
- when the debt was incurred, there was reasonable ground for suspecting that the company was insolvent, or would become insolvent by
incurring debt;
Director
- the debt was incurred after June 1993
- Insolvent trading liability
* Reasonable grounds for suspecting - objective (ordinary director in a similar position)

* Suspecting - higher or more onerous than knowing or expecting

* incurred a debt - at the time of making contract or delivery of goods or services.

Director's Defense- S588H

- That the director had reasonable grounds to expect and did expect that the company is solvent at the time the debt was incurred, and
would remain so. Director
- that the director had reasonable grounds to believe, and did believe that a competent and responsible person for providing such
information that the company was solvent - Defense s588H
- because of good reasons (illness etc) that the director did not take part in management of the company at the time
- that the director took all reasonable steps to prevent the company from incurring debt.

Director's Penalty:

-Should the court find that the directors have breached s588G, their liability:
The director will be liable to pay the company compensation equal to the amount of loss or damage suffered by unsecured creditors, Director
which are generally payable to the company's liquidator for distribution to creditors.
- Penalty (bleach s588g)
- Consequences
* Imposition of a civil penalty order
* If proved dishonesty, director may be guilty of criminal offence
 R v. Drysdale (1978) : non re elected director continued to act in that role Case:
R v. Drysdale (1978)
Director - De facto director Mistmorn Pty v Yasseen (1996): Non appointed person acted with business card described as managing director, negotiated transactions
(s.9 (b)(I)) on company's behalf - found only to have attempted to avoid legal consequences but netheless a de facto director Mistmorn Pty v Yasseen (1996)

DCT v. Austin (1998): Resigned director continued to help out friends as director. Court looked behind the formalities. DCT v. Austin (1998)
Director - Shadow Directors Standard Chartered Bank v Antico (1995): Parent company liable as direct where insolvent subsidiary continued to trade. Court extended Case:
(s.9 (b(ii))) shadow direct to include a company Standard Chartered Bank v Antico (1995)
- Appointed to stand in when required
- Is a director only at the time they are called upon to act
- Intermittent obligations
- No legal status when director is present (Strathmore Group Case, 1991)
Case:
- Special provision for alternate directors to be made for companies after 1/7/98, appointment of alternate directors is allowed if other
Director - Alternate Director
directors approved.
Strathmore Group Case 1991
- A public company must pass a resolution by way of authorization
- Under insolvent trading legislation, alternate director who has never acted is not liable.
- An alternate director cannot act under a power of attorney.
- Alternate director is not affected by disqualified director.
- Indistinguishable roles at board level
- Underpin by the principles of accountability and independence
- Executives are full time employees and owe contractual, common law and statutory obligations to the company
- Non executive directors or independent directors is complimentary in character, and bring in objectivity to the board Hamper
- Recommend board to have majority of non executives because they are better monitors; internal control and accountability delegated to
committees headed by non executives to obtain objective assessment.
- Hamper suggested at least half of audit committee should be non executives.
Director - Executive and
non executive directors The UK applies 'principles based' recommendations. Based on the Combined Code there should be strong representation of non executive
directors on the board generally and on the audit committee.
International Developments - combined code / Higgs /
The US is more a black letter law regime, and the Sarbanes Oxley Act 2002 defines 'independence' and require all members of the audit
Sarbanes Oxley Act
committee to be independent, thus requiring them to be non executive

The expect growth of demand of non executives director may be seen to be a significant step towards better corporate governance.

- Appointed to represent the interests of particular group, called the appointer.

- Nominee director may act in the interest of the appointer so long as they do so honestly.
- For non wholly owned subsidiary nominee directors may act in the interest of the appointers provided the believe in good faith and
interests are identical.
- conflict of interest arise when nominee director possess information and have to disclose to the appointer, especially when the company,
the director or the appointer do not agree.
- Australia and UK require nominee director to act in the best interest of the company as a wholes.
Scottish Co operate Wholesale v Meyer (1959) : society appointed nominee director to the board of a subsidiary. Society stopped supply
Director - Nominee Directors materials to the subsidiary when it no longer required the license; creating conflict for the nominee director
Case:
Scottish Co operate wholesale v Meyer (1959)
- Lord Denning - when the conflict arose, nominee director should take the side of the subsidiary. It was found that the agreement between
the appointer and the nominee does not take precedence over the subsidiary director's duties.
 S187, CLERPA provides that a director of a company that is a wholly owned subsidiary is taken to act in good faith of the subsidiary if:
- constitute of subsidiary expressly authorizes the director to act in the best interest of the holding company
S 187, CLERPA - Nominee Directors
- The director acts in good faith in the best interests of the holding
- the subsidiary is not insolvent and does not become insolvent because of the director's act.

Common law remedies:

- account for profits ( profit made by reason of breach can be claimed from the director and repaid to the company)
- damages and compensation (company may claim loss from the fiduciary or third party if participated knowingly)
Director - Enforcement
- injunction (an order to restrain from acting or forces a party to act, only company has the power to obtain an injunction)
- declaration (declaratory order to do something to remedy the breach e.g. director to do an act or restore or become custodian)
- restoration of property (company to take back the property, recovery maybe from the hands of a third party)
- rescission (repealed) ( a contract is to be rescinded)

- Statutory derivative actions: redress against defaulting directs, s236 enables a member to take action in the name of the company, to
redress against delinquent directors or others. Must be used where grounds for an action and where the company chooses not to sue.

- Leave (permission) of court to bring proceedings in the name of the company is required
Statutory derivative :
- s237(2): lists matters: company itself will not act, applicant in good faith, in the best interests of the company, and there is a serious
question to be tried (prevent abuse); and company has had 14 days notice of application or if no notice, that it is appropriate no notice is s236
given.
Director - Statutory
s237(2)
derivative actions
- Power of the court: s241
* to order the company or its directors to do things s241
* to order independent persons to investigate and report to the court
* to investigate the books of the company and to order costs; costs orders can be made against the person who applied for the orders, the s239
company or other party.

- Approval of the conduct complained of by the general meeting will no necessarily prevent the claim nor deprive the applicant of a remedy
under s239.

Removal of a director:
- Shareholders in either proprietary or public companies may vote a director off the board at a general meeting
Director - Removal of a
- in proprietary companies, s 203C allows the company to do so s203C
director
- in public companies, s203D can apply
s203D
 Civil and Criminal Penalty provision

- Civil penalty are a range of sanctions against the defaulting directors who have breached provisions of the Corporation Law but which do
not carry criminal sanctions of fines, imprisonment, etc.

- Civil disqualification orders including disqualification from being permitted to manage a corporation, pecuniary penalty, pecuniary
penalties up to $200,000 and compensation orders.

- S184 provides that breaches of the duties to act in good faith and not to use position or information other than in the interests of the
company, attract criminal sanctions where the conduct is either dishonest or reckless. Civil Penalty:

- Relief from breach of duty through: S184

Director - Civil and Criminal
* Ratification of a decision by member note also s232
Penalty provision
* Provisions of company's constitution may permit ratification S232
* Relief from liability by court.
S 1318(1)
- It is possible for a company's internal rules to allow directors to be excused from liability for actions of breach of duty or improper use of
powers, provided no dishonesty was involved and their own vote is not required to carry the resolution.

- s199A provides that the company may not indemnify an officer or auditor against liability to the company where:
* the liability is owed to the company
* there is liability for a pecuniary penalty order or compensation order
* liability is owed to a third party which did not arise out of conduct in good faith

- Court may relieve a person from liability (honesty) section 1318(1)

This can be used as a defense by the directors which involve the exercise of business judgment on the basis that it was not the court's
task to second guess board decisions taken in good faith.

Director - Statutory The safe harbor from liability can be applied IF the directors/ officers made:
Business Judgment Rule * judgment in good faith for a proper purpose S180(2)
s180(2) * did not have material interest in the subject matter
* informed themselves about the subject matter to the extent reasonably appropriate

Rationally believed jug dement in the best interest of the company.

Management Objectives :

Enhance value of shareholders' investment in most cost effective way to achieve financial stability, ensure long term sustainability Management objective
Management -Objectives/
commensurate with an acceptable level of risks. Follow board polices.
Duty
Management duty
Management Duty: has the duty to obtain and monitor information, interpret, analyze and report to the board for purpose of executing
compliance and operational functions.
 Factors influencing management:

- company engagements
- form/ type of business organization
Management - Factors
- style of management (relating to size, capitalization and employees and incentive schemes) Factors influencing management
influencing management
- Legal requirements (Tax, AASBs, industry specifics)
- Financing arrangements
- Competitive focus
- Availability of information
Role of CEOs:

- Responsible to the board and manage business, controls management

- Recommend policy and strategic direction to the board
CEO - Roles - Act as spokesperson for the company Role of CEO
- As the most senior executive
- May occupy a board position
- Identify compliance issues, address them and report to Board
- Keep the board informed
Directors interest:

- Maximization of profitability
Directors Interest
- Meeting interests of shareholders
- Building investor confidence
- Compliance with ASX listing rules on disclosure of Corporate Governance practices
AICD

- Primary focus in enhancing performance, profitability and wealth on behalf of shareholders

- Balanced role for shareholders between right and obligations such as vote
AICD (reading 4.2) - Support reasonable expression of shareholders' opinions
- Disclosure and transparency to achieve company objectives
- Primary objective of board to promote performance based objectives
- No prescriptive Role
- Company to take responsibilities on appropriate CG and Disclose as it see fit.

AICD's response to CLERP

- Minimization of costs including establishment, compliance transaction costs

- Cost benefit analysis for all legal amendments
AICD - response to CLERP AICD 's response to CLERP
- Genuine consultation with users of legislation at all stages
- less black letter law, more enabling and default legislation
- Stated aims should be wealth creation, improved employment and investment, security, equity and social and environmental standards
- Private enterprise recognized as primary wealth creating engine of economy.
 Investors' interest

- active participation
- differing needs and objectives (long term and short term)

Investor's confidence and involvement in share trading have been the result of
Investor's Interests
- market floats, privatizations, increased access to information and services.
- increased involvement of fund managers and institutional investors in capital raising
- increased interest of dissemination of information about share ownership has stimulated interest in corporate governance and code of
best practice.

Investors can be individual or institutional.

1) Individual shareholders wants

- company efficiently and profitably run Investors1) individual
- honesty from directors, officers and managers
Investor - Individual - best possible performance from the most efficient management ASA
- compliance with legislation
- Transparency, communication, accountability CASAC (Companies and securities advisory Council)
- represented by ASA
- CASAC report of June 2000 " Shareholder Participation in the modern listed public company" (reading 4.3) recommended GM
requisition, resolution threshold, notice of AGM, proxy arrangements, disclosure of proxy, directors' election.
2) Institutional investors

- include insurance companies, pension funds, investment trusts and professional fund managers
- growth - due to changes in government policies and compulsory superannuation
- Institutional investors' interests are similar to individual investors' (accountability, transparency, efficient management)
- There are limitations on the degree investors can affect company conduct by using voting power
Investors - Institutional Hampel Report (CCG 1998, paras 2.14 - 2.15)

Critism of institutions' failure to publicly use their voting power to encourage companies to adopt corporate policies. Difficulties associated
with obtaining consent and directions from beneficiaries on how to vote and what issues respond to would in most cases place such a
burden on institution as to deter it from voting.

- Hampel Report recommended dialogue between companies and institutional investors

A greater part in supervising the board can only be achieved by agreement or regulation, as the court do not support shareholders
breathing down the board's neck.

Issues for institutional investors are:

- lack of resources to monitor company (cost v benefit)
Investor - Institutional Issue - difficulty to sell out to another institution if problem is known
- the free riding activities is more appropriate to individuals and not to institutions
- less question raised in AGM but prefer private consolation
- conflict of interests may arise
- own institutional corporate governance problem
- regular support of board will result in any disagreement being noted for constructive dialogue.
 Institutional investor can act individually act collectively to achieve greater transparency and accountability because its share ownership
and media interests

In Australia the Investment and Financial Services Association (IFSA) and California Public Employees Retirement Scheme (CalPERS) in CalPERS
Investor - Institutional Issue the US are particularly vocal in corporate governance debate.
IFSA
CalPERS claims its right as a corporate owner and encourages others to do the same. It advocates that a company's long term
sustainable value depends on the board's accountability to owners, the quality of management and the strength of relationships with
employees, suppliers and lenders.

- International investors' needs arise from globalization

- compliance with international standards so that investments can be ranked by international ranking agents such as Moody's and
Standard and poor's is essential for financing.
- Areas agreed include accountability, transparency, directors' obligation such as independence, voting method, codes of best practice and
dialogue
Investor - International BRT
Business Round Table
BRT is an association of CEOs and has published their statement on corporate governance in 1997.
BRT regards formal statements do not change attitudes but soft factors like the quality and personalities of director can effect change.
BRT aims at benchmarking CG for large, small, public and private companies, recommends consultations and sets out proposals for
practical implementation.

achieving goads of good corporate governance is a way to align interests of the board, management and the shareholders.

There is no agreement on the enforceability required for good corporate governance. Effective supervision, for example, does not require
Align interest of the board, management and
legislation. but areas such as financial reporting can lend itself to regulation.
shareholders
Good Corporate Governance OECD protects shareholders' right. but protection of stakeholders, employee participation, consultation over extraordinary matters are yet
OECD
to be developed.
Hampel
Hampel referred to people, teamwork, leadership and skills produce prosperity, but accountabilities require regulations.

best option for co operation between the board and stakeholders to achieve common ground.

Section 1317AA-AE, CA2001 (revised 2004) protects whistleblowers or those who seek public interest disclosure.

Whistleblowers Scope: officer, employee, contractor or its employees.

Authorized persons to access information: ASIC , auditor, director, secretary, senior manager or a person authorized by the company.

- before disclosing, name of the discloser is to be provided

- reasonable grounds to suspect contravention of a provision of CA or an officer may have done sol acting in good faith.
- Section 1317AB protects discloser from criminal or civil liability, including liability for defamation, enforcement of contractual remedies
Whistleblower's protection and termination of contract.
- section 1317 AC prohibits victimization or threat
- section 1317AC provides right to compensation if victim suffers damages.
- criminal code Act 1995 enforceable if a person provides false or misleading information to ASIC.
 Corporate governance statements become part of ASX rule from 1 July 1995.

- publicly listed companies are required to disclose a statement of its main corporate governance practices in annual report during the
reporting period (or part of)

- reading 4.4 should be studied to identify the requirements of Listing Rules by ASX.

- proprietary companies, unlisted public companies are required to prepare annual reports (no need for CG statements)
Reporting Issues
- little available data indicating voluntary provisions of corporate governance matters to shareholders or stakeholders

- listed public companies are required to set out: in a statement disclosing the extent to which the entity has followed the best practice
recommendations during the reporting period. if the entity has not followed any of the recommendations, it must identify those
recommendations that have not been followed, and give reasons. ASX Guidance Note Rule 4.10.3. Also see Reading 4.4 Parts A & B.

- Listing rules 4.3D requires a listed company to notify the market immediately it becomes aware of information that is likely to have a
material effect on its share price - continuous and periodic disclosure requirements.

1) Foundations for management and oversight

2) Structure the board to add value
3) Promote ethical and responsible decision making
ASX Corporate Governance 4) Safeguard integrity in financial reporting
principles 5) Timely and balanced disclosure
6) Respect the rights of shareholders
7) Recognize and manage risk
8) encourage enhanced performance with board and mgt effectiveness

- listing rules as set by the ASX are designed to safeguard the efficiency and integrity of the financial markets and focus on disclosure.
- the ASX operates on a regime of continuous and periodic disclosure embodied in Listing rule 3.1.
- proposal to amend listing rules in 3 ways:
(i) companies to provide information necessary to avoid a false market in securities
(ii) ASX must be satisfied that confidentiality is maintained
(iii) improve periodic disclosure
ASX Corporate Governance
- the CG principles will apply progressively. by end of 2003 all listed companies will have to disclosure their application of the
principles
recommendations. Those which have not applied will have to explain why in its annual report.
- guidance note 9A was issued as a condensed version of CG report.
- listing rule amendments mandate audit committees for the top 500 companies included in All Ord wef 1/1/2003.
- the adoption of corporate governance principles and recommendations will take place over the financial year, to appear in annual report
by 2004.
- large proprietary companies and unlisted companies are required to prepare annual reports. unlisted public companies have more
stringent reporting obligations but still are not required to make corporate governance statements.
 Triple Bottom Line - John Elkington
- Environmental , social and financial matters

Environmental accounting
- assumes the existence of costs attached to depletion of not only a company's asset but also the community's assets which have global
Corporate Social
implications.
Responsibility -
- defined as the financial value determined for assets, liabilities, revenues and expenses related to environmental activities and natural
Environmental Accounting
resources.
- shows the company's true cost of resources, waste treatment, disposal costs, the cost of poor environmental reputation and identification
and cost of environmental risk.
- enables companies to improve data collection to support better management decision making. EMS (environmental management
system) must be in place.

- Difficulties of tradiontional accounting in providing for the contingent liabilities and compliance cost, and in establishing which costs to be
tracked.

Environmental protection authorities (EPA) cannot trace every cost, hence CG principles should be used to establish working guidelines.

Environmental activities should be identified, respective consumption of resources tracked, activities costed and attribute to cost centers.
Corporate social
responsibility -
Corporation Act 2001 requires the director's report to make provision about details of the company's performance in relation to
environmental
environmental regulations where appropriate.

Companies are required to comply with EPA regulatory requirements

Increased awareness by public sector - system of environmental economic accounts (SEEA) common approach by governments.

Business council of Australia advocates policies of responsible attitude to CSR issues

4 steps to CSR: 1) denial, rhetoric policies, defensive attempts, change of attitude to make policy work (Sweeney 2000)
Social Accounting
internationally the wide acceptance of the philosophy of the need of CSR can be seen from the increasing number of organizations
indicating their involvement.

The world business council for sustainable development publishes papers and policies, code of conduct on CSR.
- Globalization and global governance principles
- changing standards, CSR and sustainability reporting
- accounting practices
- Parliamentary Joint committee recommendations (4.23)
Sustainability Reporting
- roles of institutional investors Incorporate environmental social and corporate governance (ESG)
Be active and seek disclosure
promote principles in community
report
- Government prospective.