The IoD welcomes the revised FMA Corporate Governance handbook
The Financial Markets Authority has published its refreshed Corporate Governance Handbook to ensure it is up to date with developments and trends in corporate governance. The handbook plays an important part in improving corporate governance in New Zealand and assisting directors in carrying out their roles and responsibilities.
Since the handbook was last updated in 2014, the NZX Corporate Governance Code (NZX Code) has been significantly revised. In the light of this, the FMA has refocused the handbook to apply to non-listed and public sector entities. The FMA encourages listed issuers to refer to the NZX Code for corporate governance obligations and has removed references to listed issuers in the handbook. We support this reorientation and the general alignment of content with the NZX Code. This will result in a reduction in fragmentation, duplication and inconsistencies in the various corporate governance reporting regimes in New Zealand. It will also support companies that list in the future to transition to the public operating environment.
There are 8 high-level corporate governance principles in the handbook, reduced from 9 in the 2014 edition (Principle 9 (stakeholder interests) has been merged with Principle 8 (shareholder relations). The principles are largely the same as those in the NZX Code. There are also guidelines and commentary in the handbook. Boards are asked to explain how they apply each principle, rather than ‘comply or explain why not’ (as per the NZX Code). This allows for flexibility and meaningful reporting.
The handbook has been revised in the light of developments in corporate governance, including around non-financial reporting, director and executive remuneration, risk management and auditors. Many of the IoD’s suggested revisions from our submission last year have been included in the handbook.
The IoD and Chapman Tripp are updating our Corporate Governance Codes Compared Guide to reflect the handbook’s revisions and this will be publicly available soon.