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21 7월 2026
Insight
Australia
What has been released?
On 21 July 2026, the Advisory Group on Corporate Governance (Advisory Group) released the draft 5th edition of the ASX Corporate Governance Principles and Recommendations (5th edition). This article outlines the key changes from the 4th edition (currently in force and released in February 2019).
The draft released today is separate from the consultation draft released by the former ASX Corporate Governance Council in February 2024. The Advisory Group has built upon that prior work but primarily undertaken its own review to produce a revised and more streamlined version of the Principles.
Our impression of the consultation draft is that it helpfully simplifies some aspects of the existing regime, including to remove duplication with the law, but largely maintains the status quo in line with existing practices.
When will it apply to listed entities?
The Advisory Group intends to make a recommendation to the ASX Limited Board on the final changes to the Principles by the end of 2026, with the 5th edition to take effect in respect of financial years commencing on or after 1 July 2027. If this remains unchanged, it means:
- entities with a 30 June EOFY will be expected to report against the 5th edition for the financial year ending 30 June 2028; and
- entities with a 31 December EOFY will be expected to report against the 5th edition for the financial year ending 31 December 2028.
As with previous editions, we expect early adoption will be encouraged by stakeholders.
Our impressions
As a starting point, the 5th edition has retained the same 8 broad Principles, with some minor language refinements, and the ‘if not, why not’ approach to reporting. The Explanatory Material (previously referred to as ‘Commentary’) is still non-reportable material intended to provide context, interpretation and practical assistance. Some aspects are also proposed to move into additional resources available on the ASX website, in a move we understand is intended to try and discourage “tick box” approaches to policy content and similar matters.
In our view, while the draft 5th edition recommends disclosure of new or more specific matters (for example, remuneration arrangements, stakeholder engagement, Board oversight of culture, and the integration of diversity into succession planning), we expect that most large, listed entities will already have underlying governance arrangements in place which are consistent with these recommendations. This means that the 5th edition will not materially alter what occurs in practice but instead require pulling existing threads together and distilling that information in a slightly different way.
Helpfully, despite calling for new or more specific disclosure in certain areas, the draft 5th edition provides greater flexibility in relation to how companies give effect to the Recommendations. This approach aligns with the Advisory Group’s recognition that there is “no single model of good governance for every listed entity”.
We have set out below our top takeaways from the draft 5th edition as well as our reflections on two key themes.
Top takeaways
| Topic | Tell me more | So what? |
|---|---|---|
| Focus on stakeholders | Under new Recommendation 3.1, the board of a listed entity should have regard to its security holders and other stakeholders and disclose its processes for engaging with them. The updated Explanatory Materials now prompt entities to reflect on how the design and effectiveness of governance structures and practices can provide transparency to stakeholders and support stakeholder confidence. The concept of ‘stakeholders’ has also been incorporated into the Explanatory Materials for other Recommendations (see e.g. Explanatory Materials for proposed Recommendation 1.1 relating to the board charter, and Recommendation 3.3 relating to ‘indicators of a positive organisational culture’). | Entities will need to consider who their key stakeholders are, and whether their stakeholder engagement processes are appropriate and can be adequately described and disclosed. For many entities, engagement with stakeholders will already be an established part of decision-making processes. |
| Auditor tenure | New Recommendation 4.3 would require a listed entity to disclose:
| Although this is a new recommendation aligned to contemporary market focus on auditor independence, we expect most entities will be able to make these disclosures. |
| Director independence | The factors relevant to assessing the independence of a non-executive director (previously contained in Box 2.3 in the 4th edition) have been amended and included in the Explanatory Materials for proposed Recommendation 2.4. Notably, the prior reference to “last three years” in this context has been deleted and a more flexible reference to “recent” has been adopted. | While not binding, the Explanatory Materials for proposed Recommendation 2.4 support a more flexible approach to determining director independence. |
| Remuneration | Under proposed Recommendation 8.2, an entity should have the ability to adjust performance-based remuneration outcomes for its senior executives downwards when appropriate. Proposed Recommendation 8.3 states that an entity should:
The recommendation in the 4th edition (Recommendation 8.3) to have and disclose a policy on hedging equity-based remuneration has been removed due to regulatory duplication. | The new Recommendations 8.2 and 8.3 require more specific disclosures than their 4th edition equivalents. It is common for the performance based-remuneration of senior executives to be subject to provisions allowing the downwards adjustment of remuneration outcomes. Companies may choose to include this information in the Remuneration Report and include a cross reference to that disclosure. |
| Board oversight of culture | Proposed Recommendation 3.3 recommends that a listed entity:
References to specific policies (such as the code of conduct, diversity policy and whistleblower policy) have been removed in the draft 5th edition in favour of a broader reference to “key policies”. | Although this is a new recommendation, we expect most entities will have processes in place for the board to be informed of material breaches of key policies and to enable directors to monitor culture. However, entities will need to consider whether these processes are fit for purpose and can be adequately described and disclosed. |
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Consultation process
Written submissions on the consultation draft can be made by 14 September 2026. The consultation process will also include a mix of public forums, industry consultations and roadshows, including forums held in capital cities.
Interestingly, ASX is also consulting on changes to simplify the Appendix 4G.
The consultation draft and other resources are available on the ASX website.
Key contacts
Priscilla Bryans
Partner, Melbourne
Carolyn Pugsley
Partner, Melbourne
Timothy Stutt
Partner, Sydney
Lauren Selby
Partner, Sydney
Anna Coroneo
Executive Counsel, Sydney
Bianca Marcocci
Executive Counsel, Sydney
Ellen O’Rourke
Senior Associate, Sydney
Legal Notice
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills Kramer 2026