Case studies

Applying Plain Governance’s principles: Explain the adopted arrangements and give reasons for their design and use

ASX consultation on the Corporate Governance Principles and Recommendations, draft fifth edition

The draft fifth edition of the ASX Corporate Governance Principles and Recommendations was published for consultation in 2026.

The framework is designed to support listed entities in explaining their corporate governance practices to investors, as well as giving investors a reference to assess the quality of those practices. As such, an overly compliance-focused approach defeats the purpose of the framework and the key values underpinning it: transparency, accountability, and flexibility.

Applying the Plain Governance principles to the draft shows that the framework should go further in this direction by providing a simple explanatory structure for reporting on the adoption of the Recommendations.

Where an entity follows a Recommendation, it should explain how the recommended practice is applied and how it supports the relevant Principle. Following a Recommendation should not, by itself, be treated as demonstrating that the resulting governance arrangement is suitable or effective.

Where an entity does not follow a Recommendation, an explanation should consist of:

• the context and the reason, cause or trigger for the departure from the Recommendations;
• the nature of the alternative or current arrangement;
• how, and to what extent, the arrangement satisfies the relevant Principle;
• any material risks arising from the arrangement and the measures used to mitigate them;
• whether the arrangement is temporary or ongoing, including any relevant timeframe and its review arrangements.

Such a structured rationale can accommodate both an alternative arrangement considered more suitable for the entity and actions taken towards implementing a Recommendation.

Where a suitable alternative is ongoing, the entity should explain when or in what circumstances it will be reviewed. Where a shortfall remains, the entity should identify the limitation, how it is being addressed and the relevant timeframe.

This would support reasoned self-assessment and provide investors with a clearer basis for evaluating governance arrangements.