Good Grief? or Good Governance?

In last Wednesday's The Australian (p.11, 19 Feb 2025), Janet Albrechtsen writes of the contrast between the ASX Corporate Governance Council's proposed new draft of corporate governance rules (63 pages), and an alternative of seven pages proposed by John Wylie (a veteran fund manager). He urges that the former be scrapped, and re-written from first principles (he enumerates seven). His views are also reported recently in The Australian Financial Review. If you are interested in corporate governance, as I am, you may care to review these articles.

Wylie speaks of simplification, of the need to align companies to growing the Australian economy and the wealth of its shareholders,, with much greater emphasis on performance than mere compliance. I'm not sure I agree with his view that director re-elections should be annual for all directors (as is "best practice" in Britain and the US), although I do think AnteoTech's constitution should be changed from its current "one third of directors on rotation to resign and perhaps be re-elected" (my wording here) - I'd simplify, that each director resigns after two years (and is free to re-nominate).

It is significant that currently the Council cannot agree about its proposed draft; I think it is another indicator of the emerging questioning of much of the zeitgeist on a whole range of issues that we are seeing in the world at large, not only on our own shores.

As a shareholder in any public company (such as AnteoTech), I want to know something of the character and qualifications of each of its Board members. But most importantly, I want to be assured that each has a good grasp of what the company is doing, and how well or otherwise it is operating. How else can a Board member sign off on ASX releases ("this announcement has been approved by the Board"), unless they really are sure of its content. Taking it on trust because a CEO or a Chair says its ok, is not good enough. Part of that governance of the company includes having a good understanding of matters such as the effectiveness of company structure, of the calibre of management and staff, of morale, of supply and demand constraints . . . in other words, a good grasp of the operational status and progress of the company. I disagree most strongly with any ironclad distinction between "strategic" and "operational" matters. How can you sign off on a public statement unless you are clear about what is happening at the operational level? Just take it on trust? No, thank you.

So when elections for directors arise (such as at AGMs), how do we as shareholders know whom we are voting for? How can we be satisfied that a director has actually made some decent contribution to the deliberations and decisions of the Board - or been no more than a rubber stamp, a compliant director quite happy to agree with the CEO or Chair? Well, I'd like to know that the director has actually visited the company regularly in some depth - not just a glad-handing exercise - where thoughtful meetings with senior management have occurred, where he or she has rubbed shoulders with staff (even if it be a social occasion where worthwhile conversations can arise). And I'd like to hear some feedback - how about twice a year through webinars, where (subject to commercial or other sensitivities) significant issues or observations can be discussed. Measures such as this would enable me to weigh up much better, whether that director should get my vote.

This approach of the director being much closer to what is happening in the company, is one that would need to be encouraged by the Chair. Chairpersons are probably assigned too much authority by Board members; perhaps some of them don't have enough "ticker" to stand up to a Chairperson with a strong personality.

Now if you think everything is hunky dory with how Australian and overseas companies are being governed, then lift your head out of the sand, and look at the failures in governance that pop up from time to time. The list and the causes are sobering. No company is exempt from the risk of governance failure - and so, neither is AnteoTech.