Disclosures need improving - Commission

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Many entities that issue securities to the public need to improve disclosures relating to ethical standards, directors and executives' remuneration, risk management, and shareholder and stakeholder relations, the Securities Commission says.

The finding comes from the commission's latest review of corporate governance which looked at 68 issuers.

Many of the issuers disclosed relevant information on a range of areas, the commission said today.

Those included board members' independence, expertise and experience, the use of board committees, remuneration policies, risk management policies and processes for ensuring external auditors' quality and independence.

Among the areas where reporting could be improved were disclosure of how directors observed and fostered high ethical standards, how remuneration incentives aligned with the issuer's objectives and risk management policies, and how risk management policies were applied to material risks faced by the issuer.

Information about the way boards built constructive relationships with shareholders that encouraged them to engage with the entity could also be improved, along with information about who boards considered their key stakeholders to be and how it respected their interests.

The review assessed the annual reports and website disclosures of selected issuers against the commission's nine principles of good corporate governance.

Commission chairwoman Jane Diplock said correct and thorough disclosure of corporate governance policies and procedures should be the first thing a company did to demonstrate the strength of its corporate governance.

But she acknowledged that was no guarantee of good governance in practice.

- NZPA