Public companies falling short on disclosure

Wednesday 28th July 2010

Many public companies need to improve their disclosure on such matters as ethical standards and directors' and executives' remuneration, according to the Securities Commission.

"It is important that investors are given high-level assurances that companies have robust corporate governance policies in place," says commission chairwoman Jane Diplock in a statement.

"This gives them confidence not only in the company, but in the wider New Zealand market as well," Diplock says.

Her comments follow the commission's latest review which examined the records of 68 public companies which issue securities available to the general public. The examination included annual reports and web sites.

As usual, the commission did not identify any particular companies which are falling short of its desired disclosure standards.

It says companies could improve their reporting by disclosing "how directors observe and foster high ethical standards, such as by complying with a code of ethics."

They should also report on how remuneration incentives align with a company's objectives and risk management policies and how risk management policies are applied to material risks the company faces, it says.

Companies should also report on how their boards build "constructive relationships with shareholders that encourage them to engage with the entity."

"Good corporate governance is critically important to the integrity and stability of any company," Diplock says.

Nevertheless, she acknowledges such disclosures are "no guarantee of good governance in practice."

Businesswire.co.nz

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