Thursday 14th August 2003
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"We feel very strongly about the importance of good corporate governance as a tool for promoting investor confidence and enhancing the transparency and accountability of our Listed Issuers," said Elaine Campbell, NZX General Counsel. "We also recognise the need for balance between regulation and the cost of compliance and, for this reason, have provided flexibility in the form of the Code, which will be implemented on a disclosure basis."
The final submission, including proposed changes to NZX Listing Rules and a Best Practice Code, is the result of extensive consultation with industry participants, which has led to amendments being made to the original proposal.
Most initiatives can now be found in the Corporate Governance Best Practice Code, which is disclosure based. However, the two core aspects of good corporate governance - the requirement for independent directors and the requirement for an Audit Committee - are included in the Listing Rules and require mandatory adherence.
The attached commentary compares the final submission with the original proposal in detail and provides additional observations on the proposed Listing Rule changes.
"Corporate governance practices are not designed to prevent corporate failures, but rather to assist in prudential and risk management and give company Boards a framework with which to make decisions," said Campbell. "The mixture of Listing Rules and Best Practice Code is designed to encourage both active participation and dissent at Board level, which, we believe, provides good risk management and growth for our capital markets."
Once the Rules have been submitted, the Minister has 40 days to disallow them. The Rules will come into force from the date of submission. The rules provide for a transitional period of 12 months from the date of commencement or at the conclusion of the Issuer's annual meeting.
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