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ASX Corporate Governance Principles and Recommendations, Fifth Edition: Consultation Submission by CHAIRS Global

Letter to the Chair of the Advisory Group on Corporate Governance

CHAIRS Global Pty Ltd
Level 13, 139 Macquarie Street
Sydney NSW 2000

Dr Philip Lowe
Chair, Advisory Group on Corporate Governance
ASX Limited
39 Martin Place
Sydney NSW 2000

12 September 2026

Dear Dr Lowe,

CHAIRS Global welcomes the opportunity to comment on the draft Fifth Edition of the ASX Corporate Governance Principles and Recommendations. We congratulate ASX and the Advisory Group on producing an impressive, substantially clearer, more coherent and more contemporary instrument.

CHAIRS Global is an advisory firm dedicated to supporting the Chairs of listed and non-listed boards in the leadership of their Board effectiveness and people decisions such as those pertaining to succession, talent performance, culture and capability. Our submission is offered from this specific viewpoint.

Understanding and advising on the development of best boards, we support the draft's direction. The removal of duplication with law, the clearer distinction between Principles, Recommendations and Explanatory Material, the explanation of why each Principle matters, and the renewed emphasis on genuine if not, why not reporting are all welcome. They return the framework toward its true purpose of better governance, not merely more governance process.

There is an important consequence that deserves to be recognised explicitly. Fewer recommendations do not necessarily mean less governance work. The draft transfers part of the burden from prescribed compliance into board, and increasingly today, a Chair's judgement. We welcome and understand the importance of that transfer and consider it right. But judgement that must withstand disclosure, investor scrutiny and hindsight requires new capability, to an extent resources, and time.

Accordingly, our principal requests are for precision about what is expected, explicit proportionality across the remarkably diverse ASX market, and a transition timetable that permits systems-dependent recommendations to be implemented credibly. We also propose targeted drafting changes and practical implementation resources.

We hope this submission is received in the constructive spirit in which it is offered. We, and the diverse Chairs we are proud and diligent to serve, will want the Fifth Edition to succeed and believe the recommendations below would help boards deliver governance substance rather than defensive disclosure.

Yours sincerely,

Stephen Langton, Kok Kong Chan and Peter O'Brien
Directors
CHAIRS Global Pty Ltd

1. Summary of Our Observations and Recommendations

Observing through the lens of watching and supporting Chairs and their boards in Australia over the past era, we recognise that the draft Fifth Edition is an encouraging and disciplined evolution of Australia's corporate governance framework. CHAIRS Global supports its central premises and recommends that ASX holds firm on the simplification achieved. We feel that Chairs will see that the draft reduces prescription on the page but increases the importance of board judgement in practice. The final edition should make that transfer visible and support it with precision, proportionality, practical examples and a little patience.

What We Especially Welcome in Edition 5

1. The removal of recommendations that substantially duplicate law or regulation;
2. The clear separation of the high-level Principles, reportable Recommendations and non-reportable Explanatory Material;
3. The new Why this Principle is important statements, which provide a purpose against which an alternative governance practice can be explained;
4. Replacement of mandatory-looking board skills matrix disclosure with an outcome-focused assessment of collective capability;
5. Explicit recognition of the Chair's role, better board-paper feedback loops, and independent evaluation of the Chair;
6. A materiality-led approach to risk disclosure and a measured approach to remuneration adjustment mechanisms; and
7. Retention and reinforcement of if not, why not as the defining feature of the Australian framework.

What We Raise Above Other Observations as Important Considerations for Further Review

2. Perspective and Guiding Principles

A submission from the Chair's side of the table. The Chair experiences a governance recommendation differently from a policy drafter. A recommendation becomes agenda time, information demands, executive work, committee responsibility, board dialogue, disclosure judgement and, ultimately, a position that must be capable of explanation after an event.

How the recommendations are read, whether as requirements to be complied with or as an invitation to exercise judgement, also shapes how a Chair leads and, importantly, who is willing to take on the role. More than half of surveyed ASX 200 Chairs consider chairing a prominent private company Board as more appealing than chairing a listed one.¹ The Fifth Edition therefore has an opportunity to strengthen governance and accountability without adding burden that erodes the appeal of listed Board leadership.

Both considerations lead us to support the draft's movement away from prescription. Chairs do not want a checklist to substitute for judgement. At the same time, broad drafting can create defensive behaviour where a recommendation is susceptible to being defined with hindsight. The final text should therefore preserve flexibility while making the decision boundary sufficiently clear for boards to exercise judgement confidently.

Three Tests for the Final Edition

Precision. Can a conscientious board understand the expected governance outcome and the disclosure boundary without needing to invent a market convention?

Proportionality. Can an entity with a small board, limited resources or an early-stage business explain an effective alternative without being treated as a lesser governance citizen?

Practicality. Can management build information and verification systems, and can the board test them, before it must make a public statement about their quality?

3. Changes We Strongly Support

3.1 Removing Duplication With Law

We support removal or relocation of recommendations substantially covered by legislation and regulatory guidance. Repeating statutory obligations in a governance code adds length without necessarily improving conduct. It can also train boards and investors to treat the Principles as a compliance inventory rather than an instrument for thoughtful governance. ASX should resist pressure to restore duplication unless a clear governance gap can be demonstrated.

3.2 Explaining Why Each Principle Matters

The Why this Principle is important statements are among the draft's most valuable innovations. They give boards an explicit purpose against which to design and explain an alternative practice. This is essential if if not, why not is to operate as intended. We recommend retaining these statements in full and using them as the anchor for ASX's worked examples.

3.3 Distinguishing Principles, Recommendations and Explanatory Material

The clearer hierarchy is welcome. It should improve usability and reduce the tendency to treat every sentence as reportable. That benefit will be fully realised only if the legal and market status of Explanatory Material is made unmistakable, as discussed below.

3.4 Replacing the Skills Matrix Obligation With Capability Judgement

At CHAIRS Global we have, in Australia and overseas, been strongly counselling Chairs to shift from the old Skills Matrix to a new Task and Capability Matrix. The former being seen as a benign collective CV summary with disregard to contingency. The latter, a due diligence that presents 1: Here are the tasks that this board must deliver on in the coming era. 2: Therefore, here are the deduced requirements of the board in skills, experience, qualification and collective capability. 3: Here is our analysis of ourselves against that contingent need for this era. 4: Here is how we are going to actively address the gaps. We have been pleased how many Chairs are choosing to make this shift even without regulatory encouragement to yet do so and the encouraging response from investors in seeing this move.

We support the move from disclosure of a board skills matrix to assessment of the collective skills, knowledge and experience the board needs. Many published matrices have become generic, inflated and only weakly connected to strategy or succession. The proposed approach directs attention to the more important questions: what work the board must do, what collective capability that work requires, what capability is present, and how gaps will be addressed.

3.5 Recognise the Chair and Improve Board Work

The draft's description of the Chair's role is practical and overdue. We particularly support the text encouraging feedback to management on the volume, quality, relevance and timeliness of board information. This legitimises a conversation that is fundamental to board effectiveness but too often treated as administrative. We also support a suitable non-executive director leading the Chair's evaluation and supporting Chair succession planning processes.

3.6 Materiality-Led Risk and Measured Remuneration Adjustment

Recommendation 7.4's focus on material risks is conceptually sound: materiality, rather than a predetermined category, should govern disclosure. We also support Recommendation 8.2's outcome-focused requirement that an entity be able to adjust performance-based remuneration downwards when appropriate, rather than prescribing a single mechanism across diverse plan designs and jurisdictions.

4. Targeted Drafting Recommendations

4.1a Recommendation 2.2: Disclose Capability Without Forcing Self-Indictment

We support Recommendation 2.2, though suggest that the phrasing " disclose ... the outcome " needs clarification. A board should be candid about future capability priorities. It cannot responsibly publish wording that is reasonably read as declaring a present director unfit while recommending that director for re-election. Without guidance, disclosure is likely to become bland and unfalsifiable.

Suggested explanatory wording

Outcome disclosure should describe the board's collective capability in relation to the entity's strategy and material risks. It may identify forward-looking capability, development and succession priorities and need not attribute a capability or gap to an individual director. Disclosure should not require information that would unreasonably prejudice a current appointment, re-election or confidential succession process.

4.1b Recommendation 2.2: Normalise Preparation and Development for the Distinctive Role of the Chair

We support the recommendation to facilitate Director onboarding and ongoing professional development, countering prevailing perceptions that the Board should " know it all " and the prejudice against investing in meaningful Director learning. Noting the Fifth Edition's recognition of the distinct responsibilities of the Chair, we propose extending the explanatory material to normalise onboarding and development for the role of the Chair.

Suggested explanatory wording

An entity should also consider what induction, mentoring or development would support a Chair to perform the distinct leadership responsibilities of that role.

4.2 Recommendation 2.4: Define Timely Independence Disclosure

The draft says that a changed independence determination should be disclosed and explained to the market " in a timely manner when feasible ". Boards need to know whether this means an immediate market announcement, publication on the governance website, or inclusion in the next periodic governance disclosure. The interaction with Listing Rule 3.1 makes ambiguity undesirable.

Suggested clarification

A material change in a director's independence status should be announced promptly where it is information requiring disclosure under the Listing Rules. In other cases, the entity should update its website disclosure within a reasonable period and include the change in its next corporate governance statement.

4.3 Recommendation 3.1: Keep Stakeholder Regard Within the Legal Frame

We support meaningful engagement with security holders and other stakeholders. Stakeholder insight is often indispensable to long-term value creation, culture and risk oversight. Our concern is not with the substance but with avoidable uncertainty about whether the Recommendation suggests a new, different or expanded duty. The current footnote to section 181 is helpful but too remote from the operative text.

Suggested revised wording

The board of a listed entity should act in the best interests of the organisation, consistent with the legal duties applying to its directors. In doing so, it should have regard to its security holders and other stakeholders and disclose its processes for engaging with them. This Recommendation does not create, extend or modify any duty owed by a director.

4.4 Recommendation 3.3: Define the Board's Reporting Perimeter

The terms key policies and trends in breaches require a clearer decision boundary. If the board is not permitted to define the policies central to culture, that boundary will be set after the event by an adverse reader. Further, trend reporting may require consolidation across conduct, whistleblower, people, safety and compliance systems that many smaller entities do not presently have.

Suggested revised wording

A listed entity should ensure that the board determines which policies are key to supporting its culture and is informed of material breaches, and material trends in breaches, of those policies to the extent permitted by law. The nature and frequency of reporting, including whether trend analysis is quantitative or qualitative, should be proportionate to the entity's size, complexity, risks and operating environment.

4.5 Recommendation 4.2: Proportional Verification, Not Repetitive Process Prose

We support stronger verification of periodic corporate reports. The present definition, however, brings together very different instruments: from an annual sustainability report to a quarterly cash flow report. A single undifferentiated expectation risks either over-engineering minor reports or under-explaining significant ones. It is also unclear whether an entity must repeat a process account for every report or may describe a standing verification framework and identify report-specific assurance where relevant.

Suggested revised wording

A listed entity should disclose the framework it applies to verify the integrity of periodic corporate reports released to the market. The verification process should be appropriate to the nature, materiality and audience of the report. Where a report has been subject to internal or external assurance, the nature and extent of that assurance should be disclosed in or with the report.

4.6 Recommendation 8.3: Protect Small-Cap Access to Capable Directors

The principle that non-executive remuneration should preserve independent judgement is sound. The practical issue is that options, rights or other appropriately structured equity may be the only feasible way for a company, whether an exploration, development, start-up entity or otherwise, to attract directors with the requisite capability and experience. The Explanatory Material recognises this, but market practice may still treat an explanation as failure.

Further, the current wording of Recommendation 8.3 is prescriptive in a way that is at odds with the general approach of the Fifth Edition: prescribing both how the Board is remunerated (" only fixed fees ") and for what it is remunerated (" to reflect their time, commitment and responsibilities "). The latter in particular fails to account for the value, experience and other factors that may be relevant to the appointment and remuneration of non-executive directors.

Suggested revised wording

A listed entity should ordinarily remunerate non-executive directors by fixed fees in cash and/or shares or units, plus superannuation contributions. An entity may use other forms of equity where appropriate to its size, stage, international exposure and financial capacity, provided it explains the rationale, identifies and manages risks to independence and role clarity, and obtains security holder approval where required.

4.7 Recommendation 9.1: Focus on Effective Participation

The objective is correct, but a literal language trigger may capture directors who are fluent and fully effective in a second language. The governance issue is not linguistic difference itself; it is whether the director can understand, contribute and discharge their obligations.

Suggested revised trigger

A listed entity should disclose the processes it has in place where a director requires language support to understand meetings or key corporate documents, contribute effectively to discussion and properly discharge their obligations.

5. Cross-Cutting Implementation Safeguards

5.1 Publish an Authoritative Proportionality Statement

The draft itself recognises that governance arrangements differ with scale, size and operational complexity. That concept should be consolidated into a short implementation statement. It need not create tiers or exemptions. It should simply confirm that the quality of an explanation is assessed against the Principle and the entity's circumstances and context, not against whether the entity has replicated an ASX 100 structure.

The statement should address at least board and committee size, use of deputy chair or senior independent director arrangements, formality of culture data, verification processes, external assurance, and non-executive director remuneration.

5.2 Protect the Non-Prescriptive Status of Explanatory Material

ASX states that Explanatory Material is non-reportable and non-prescriptive. We recommend going further. Boards will reasonably be concerned that detailed examples may later be advanced as evidence of what a reasonable board or Chair should have done. The concern is heightened by the draft's citation of recent directors' duties litigation, even though, for example, the Federal Court dismissed ASIC's case against the non-executive directors in ASIC v Bekier.

Suggested front-matter statement

Explanatory Material provides context and examples only. It is not a Recommendation, is not required to be reported against, and is not intended of itself to create, extend or modify legal duties or to establish or evidence a standard of care. Whether a practice is appropriate depends on the entity's circumstances and applicable law.

5.3 Make If Not, Why Not Credible in the Market

The framework succeeds only if a well-reasoned alternative to a Recommendation is treated as compliance with the framework, not as a governance defect. Chairs report that proxy and rating methodologies can reduce any not adopted answer to a negative score, irrespective of rationale. ASX should publish examples of good explanations and engage major investors, proxy advisers and ASIC on the intended treatment of them.

5.4 Retain a Navigation Mechanism if Appendix 4G Is Removed

We understand the case for removing a uniquely Australian second filing and the risk that Appendix 4G encourages box-ticking. It nevertheless supplies comparability and a navigation tool. If it is removed, entities should follow a standard index in the corporate governance statement, identifying for each Recommendation where the relevant disclosure appears and whether an alternative practice is used. This would preserve investor access without duplicating substantive disclosure.

5.5 Consider Providing Worked Examples and Practical Resources

1. A model Fifth Edition governance statement for an ASX 100 entity;
2. A model statement for an entity outside the S&P/ASX 300, with a small board and limited resources;
3. Examples of effective if not, why not explanations, including temporary departures;
4. A non-mandatory model board AI protocol covering confidentiality, approved tools, human verification, record keeping, conflicts and cyber security; and
5. Illustrative culture dashboards and periodic-report verification frameworks at different levels of organisational maturity.

6. Timing, Cost and Board Capacity

6.1 Systems-Dependent Recommendations Need a Full Build-and-Test Cycle

For Recommendations 3.3 and 4.2 to be meaningfully adopted, they won't be merely policy amendments. For many entities they require new data definitions, ownership, escalation thresholds, controls, reporting routines, assurance mapping and board testing. The same finance, legal, risk and company secretariat teams are implementing mandatory sustainability reporting alongside cyber security, privacy, workforce and other industry reforms. A first credible public disclosure should follow a design-and-test cycle, not coincide with its beginning.

We recommend that the Fifth Edition apply to the first full financial year commencing on or after 1 July 2028. If ASX retains the proposed date, Recommendations 3.3 and 4.2 should be phased in one reporting cycle later, with early adoption encouraged.

6.2 Board Capacity Is a Governance Quality Issue

This is not an argument against accountability, but an operating constraint. Studies at the end of 2025 and the AICD Director Sentiment Index reported that 75 per cent of directors expected compliance burdens to rise in 2026, while 58 per cent identified compliance and regulation as the leading influence on board risk appetite. Comparative research commissioned by AICD also describes Australia as the high-water mark for the breadth of director liability across selected peer jurisdictions. These conditions make prioritisation essential.

ASX could make a distinctive contribution by stating which legacy disclosures or practices entities should be able to simplify as they implement the Fifth Edition. Every addition occupies finite management and board attention. Genuine simplification should release capacity as well as rearrange it.

6.3 Review Evolving Recommendations Early

A four-year revision cycle is sensible for the Principles as a whole. It is too long for fundamental recommendations to change if implementation reveals unintended effects. ASX could commit now to a light-touch review of Recommendations 3.3 and 4.2 after two reporting cycles, including feedback from issuers, investors, auditors and Chairs.

7. Responses to the Consultation Questions

Question 1: If Not, Why Not

We support the proposed reinforcement. It will work better if ASX publishes examples of good explanations, confirms that proportionate alternative practices satisfy the framework, and preserves a consistent navigation index whether or not Appendix 4G remains. Useful linked resources should include model explanations, governance statements, an AI protocol and practical board tools, clearly labelled non-mandatory.

Question 2: Regulatory Overlap

We support the removals identified. We do not propose further wholesale deletions without a precise mapping to an equivalent legal or regulatory obligation. Where duplication is partial, ASX should retain only the distinct governance outcome and refer to the legal source in Explanatory Material.

Question 3: Board Skills, Knowledge and Experience

The change is strongly supported. It directs boards from generic skills inventories toward task-led and strategy-led capability assessment. ASX should clarify that outcome disclosure is collective and forward-looking and may be expressed through succession, development and access-to-advice priorities.

Question 4: Diversity

Yes. We support maintaining the existing 30 per cent gender target for S&P/ASX 300 boards and the broader focus on diversity of thought, experience and perspective. It is the constructive and positive performance impact from enhancing diversity that serves all stakeholders and we should encourage this over arguments for quotas and optics. We support collective rather than director-by-director personal disclosure and recommend that boards explain how diversity informs and is supported by succession planning.

Question 5: Independence

Broadly yes. Judgement should focus on whether an interest, position or relationship affects, or is reasonably perceived to affect, independent judgement, rather than rigid elapsed-time tests. ASX should clarify disclosure timing for changed determinations and avoid implying that the 10 per cent threshold is a safe harbour below which influence cannot arise.

Question 6: Principle 3

Yes, subject to clarification. We support active board oversight of culture and stakeholder engagement. Recommendation 3.1 should expressly remain within directors' existing best-interests duties. Recommendation 3.3 should let each board determine key policies and should recognise proportionate, including qualitative, trend reporting.

Question 7: Principle 8

We support the downward-adjustment capability in Recommendation 8.2 and disclosure of non-executive ownership approaches. Recommendation 8.3 should avoid adding new prescriptive requirements, as to how and what for non-executive directors are remunerated, and should expressly accommodate appropriately structured equity remuneration, with explanation, risk management and required approvals.

Question 8: Further Governance Developments

AI governance warrants continuing attention, but we do not recommend a new reportable Recommendation in this edition. A non-mandatory board AI protocol and curated resources would be more adaptive. ASX should also monitor governance of data, cyber resilience, nature-related risk and the cumulative effect of overlapping assurance regimes for possible future work.

Question 9: Implementation Obligations

Mandatory sustainability reporting under Chapter 2M is the principal concurrent implementation burden. Entities are also absorbing expanding cyber, privacy, workplace conduct and sector-specific obligations. The overlap is in scarce people, data, controls and assurance capability rather than merely in reporting dates.

Question 10: Cost and Resources

Recommendations 3.3 and 4.2 are most likely to create material resource burdens. Costs will vary too widely for CHAIRS Global to offer a responsible universal estimate. The work can include systems integration, policy taxonomy, control design, data ownership, internal audit or external assurance, board reporting and disclosure preparation. ASX should emphasise proportionality in reporting and seek confidential quantitative estimates directly from a representative issuer sample and phase these Recommendations.

Question 11: Revised Appendix 4G

We support simplification but are not convinced that the revised form resolves the tension between navigation value and box-ticking. Retention is preferable unless an equally consistent index is required within the governance statement.

Question 12: Retain or Remove Appendix 4G

For retention: comparability, accessibility, completeness checking and a common navigation tool. Against retention: duplicate filing, administrative effort and a compliance mentality. Our preferred alternative is a mandatory, standardised recommendation-by-recommendation index embedded in the corporate governance statement.

Question 13: Access to Underlying Disclosures

Require a stable governance landing page containing the current governance statement, board and committee charters, relevant policies and process explanations, with archived prior versions and clear effective dates. The governance statement should deep-link to each item. Stable URLs and an annual link check should be encouraged.

Question 14: Unintended Consequences of Rule and Guidance Changes

Retiring Guidance Notes 9 and 10 may remove useful interpretive history and create uncertainty during transition. ASX should archive them, publish a concise transition note identifying where substantive guidance has moved, and ensure the dedicated webpage is available before the Fifth Edition becomes operative. Removing Appendix 4G without a replacement structure may reduce comparability and increase bespoke investor information requests.

8. Proposed Implementation Package

We recommend that ASX include within, or make available alongside, the final Fifth Edition a concise but clear implementation package. Not to make this explicit instruction, but to make the principles-based design faster and easier to adopt.

• A one-page purpose and intent statement to assist interpretation to individual organisations;
• A more explicit legal-status statement for Explanatory Material;
• Examples of evolved corporate governance statements;
• Worked if not, why not examples;
• A standard disclosure index if Appendix 4G is withdrawn;
• Non-mandatory board AI and culture-monitoring resources;
• A transition map from retired Guidance Notes; and
• Adopting an early implementation review of Recommendations 3.3 and 4.2.

Conclusion

Leading law firms, institutes and professional bodies will be making commentary in their own submissions to this process. They bring essential professional and legal legitimacy to this overview. Our privilege and perhaps license to contribute to this process is invoking our role advising Boards and Chairs on the adoption of these into their day-to-day leadership and the operating effectiveness of their Boards.

We do not, though, just default to protecting Chairs from making their role more arduous and complex. We can see that is neither the intent nor the impact of the changes of Edition 5.

So, to be clear, we are not asking ASX to be less ambitious. We are asking it to make that needed ambition implementable.

The draft Fifth Edition is an important and timely improvement. It is shorter, more coherent and more faithful to if not, why not. It also moves more responsibility from prescribed process to disclosed judgement. That is a mature direction for Australian governance, provided boards are given sufficiently clear boundaries, proportional expectations and enough time to build the systems behind their statements.

With the targeted changes and implementation support proposed in this submission, we believe Australian Chairs will make the Fifth Edition work as a true governance instrument now, rather than merely comply with it as a disclosure exercise.

Of course, we welcome any further clarification on this submission and offer our Firm's support to the process unconditionally as much as you might require. Please do contact us through Stephen Langton, Director, CHAIRS Global Pty Ltd, at slangton@chairsglobal.com.

Endnote

1. Herbert Smith Freehills Kramer, March 2026, ASX200 Listed Chairs Survey 2026: Is Australia at Risk of Losing Its Best Directors From the Listed Market? Accessible via https://www.hsfkramer.com/insights/2026-03/asx-listed-chairs-survey-2026. Return to text

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