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Strengthening governance to align with regulatory expectations 

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Strengthening governance to align with regulatory expectations 

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Effective governance is important to the long-term resiliency and profitability of a company. Hon. Justice Neville Owen defined governance as:

“…the framework for rules, relationships, systems, and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies, and those in control, are held to account.”

Therefore, governance is a framework to ensure that an organisation can meet its strategic goal and underlying obligations.

Governance is tailored to the needs of the organisation. No-one-size fits all and organisations must consider individual circumstances when developing an approach to governance. However, good governance can be structured around three key pillars:

Accountability: clear responsibilities and oversight at board and management

Transparency: clear reporting and documented decision-making

Fairness: respect and empathy in leadership and decision-making

These can act as underlying principles to support effective design.

In determining the most appropriate governance structure, it is first important to understand the size, purpose, and structure of the company. Broadly, Australian companies are governed by three instruments:

the Corporations Act 2001 (Cth)

the company’s constitution; and

common law.

Jones Ltd is required to adopt a constitution which includes specific rules for how the company will be governed internally. The provides for clear articulation of roles and responsibilities, decision-making authorities and requirements, and regularity of Board meetings. As a first step, Jones Ltd should ensure that that constitution is fit-for-purpose and that there are clearly defined roles and accountabilities.

As a public company, Jones Ltd is required to have a minimum of three directors, who are responsible for overseeing the management of the company. As second step, Jones Ltd should ensure it has appropriate number of directors to meet its legal obligations.

To support the Directors, a governing or guidance document (i.e. Board Charter or Director Code of Conduct) outlining the obligations of directors will support in ensuring a) directors understand their regulatory and legal obligations, and b) the alignment of director behaviour to that of the company values. This document should extend beyond the legal obligations as set in Part 2D.1 of the Corporations Act which outlines to duties of directors:

to exercise their powers with care and diligence;

to exercise their powers in good faith and in the best interest of the company and for proper purpose;

not to improperly use their position or information obtained through their position to gain an advantage or cause detriment to the company;

not to cause detriment to the company; and

not trade whilst insolvent.

Further, Jones Ltd should consider whether it has the necessary governing frameworks and policies in place. These should include:

Governance and Conduct Policies

Code of Conduct

Financial Crime and Anti-Bribery policy

Conflicts of Interest Policy

Security and Data Policies

Information Security Policy

Data Privacy and Protection Policy

Acceptable Use of Technology Policy

People & Culture Policies

Anti-discrimination Policy

Remote Working Policy

Disciplinary and Grievance Policy

Risk and Operations Frameworks

Risk Management Framework

Disaster Recovery and Business Continuity

Compliance Frameworks

Financial Management Policy

Delegation of Authority Policy

Expense and Reimbursement Policy

Budgeting and Reporting Policy

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Organisation should establish a strong governance framework that promotes accountability, transparency, ethical decision-making, and effective oversight should align with Corporations Act 2001.Directors clearly understand and fulfil their statutory duties, section 180 to 184. Maintain robust financial governance processes to ensure accurate, transparent, and timely reporting. Implement a structured Enterprise Risk Management (ERM) framework aligned with recognized practices such as ISO 31000 and corporate governance expectations. Establish effective compliance monitoring and assurance activities to identify gaps and continuously improve governance maturity..ASIC plays a critical role in promoting fair, transparent, and accountable corporate behavior in Australia.

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Jones Ltd should establish a governance framework that includes accountability, oversight and transparent and effective management of risk, compliance and operations.

The ASIC expects directors to act with care and diligence, ensuring compliance with the Corporations Act 2001 and other relevant laws. Directors are responsible for:

Financial Reporting: Keeping proper books and records to enable true and fair financial statements to be prepared and audited. Corporations Act, sections 180(1), 286(1), 295, 295A, 296(1), 297, 298(1AA), 300(11A), 300(11B), 300(11C), 312 and 331

Risk Management: Managing risks and setting the company's risk appetite. r s912A(1)(h) of the Corporations Act 2001 (Corporations Act) to maintain adequate risk management systems.

Ethical Leadership: Promoting a culture of ethical conduct. s921E of the Corporations Act 2001 . Directors must act i the best interest of company and avoid conflicts of interest.

Compliance: Staying informed about relevant laws and regulations.

Ongoing Oversight: Maintaining an active role in overseeing the company's affairs, even when delegating certain responsibilities to experts.

Directors must ensure they meet these compliance obligations to maintain the integrity and sustainability of the company.

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Strengthening Governance Framework to Meet ASIC Expectations

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Strengthening Governance Framework to Meet ASIC Expectations

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Reinforce Directors’ Duties (Corporations Act 2001 (Cth)) - Ensure all directors understand and comply with duty of care and diligence (s 180), good faith in the best interests of the company (s 181), proper use of position (s 182), and proper use of information (s 183).

Implement regular director training and board papers that explicitly reference these duties.

Financial Disclosure and Transparency - Comply with Corporations Act (financial reports and audit requirements) by maintaining accurate, timely, and complete financial records and disclosures. Adopt continuous disclosure obligations where applicable, supported by a robust disclosure committee and policy.

Risk Management and Oversight - Establish an enterprise-wide risk management framework (ASX Principle 7 – Recognise and Manage Risk).

The board (or a dedicated risk/audit committee) actively oversees material risks, receives regular risk reports, and documents risk appetite and tolerance.

Strong Compliance Culture - Compliance Management System based on AS ISO 37301:2023 to systematically identify, manage, and monitor compliance obligations. Develop and maintain clear policies, procedures, and codes of conduct.

Board and Committee Structure - An appropriately sized and skilled board with an independent chair and majority-independent directors (ASX Principle 2).

Establish or strengthen audit and risk committees with clear charters and independent members.

Monitoring & Reporting

Regular internal audits, compliance reviews, and board evaluations.

Document all board and committee deliberations on duties, risk, and financial reporting to demonstrate accountability.