FMA wants your feedback on revised Corporate Governance Handbook

Friday 14 November 2014

Authors: Ian Gault and Rebecca Rose

​​The Financial Markets Authority (FMA) has published for consultation an updated version of the Corporate Governance Handbookthat was first produced by the Securities Commission in 2004 (Updated Handbook).

The Updated Handbook is the result of the increasing focus on corporate governance internationally in recent years and the contribution of corporate governance failings to the Global Financial Crisis.

Like the 2004 edition, the Updated Handbook is intended to serve as a reference guide for directors, executives and advisors in their decisions about how best to apply the nine key corporate governance principles set out by the FMA. It also supports the principles underpinning the Financial Markets Conduct Act 2013, which becomes fully effective on 1 December 2014.

Key changes

In the Updated Handbook, the nine corporate governance principles for running a good Board are unchanged. They are:

  • Ethical standards;
  • Board composition and performance;
  • Board committees;
  • Reporting and disclosure;
  • Remuneration;
  • Risk management;
  • Auditors;
  • Shareholder relations; and
  • Stakeholder interests.

But the FMA has refreshed the guidance and commentary in the key areas of:

  • How to report against the principles – expectation that Boards will report against the nine corporate governance principles in annual reports and on company websites;

  • Ethical standards – additional points on ethical standards for Boards to consider, in line with the updated ASX principles for corporate governance;

  • Composition and diversity – additional factors for Boards to consider, especially reporting of performance against diversity policies to shareholders and stakeholders. Gender diversity reporting is expected to be included in discussions on diversity of skills and capabilities;

  • Board committees – highlights the importance of audit committees and includes comments on other committees that Boards may wish to consider as a complement to their governance structures. Publication of all committee charters on company websites is encouraged;

  • Reporting – updates here reflect changes in audit and accounting standards. Revised continuous disclosure commentary for listed issuers is also included;

  • Remuneration – changes here are minor and intended to increase Boards’ focus on transparency in remuneration arrangements;

  • Risk management – updates reflect the increased focus internationally on risk management. Focus is on ensuring Boards have appropriate frameworks and strategies in place, have appropriate oversight of these and report to investors appropriately on such matters; and

  • Auditors – revisions mainly reflect legislative changes since 2004. The focus on audit quality and independence is retained.

The Updated Handbook also notes that the FMA “will continue to focus strongly on corporate governance in its market engagement and conduct work” and that it “will comment on, or take appropriate and proportionate action, where [it] finds examples of poor corporate governance.”

Further to the Updated Handbook, the FMA shortly will release a guide for directors of companies considering a public listing on the NZX.

How to make a submission

Submissions on the Updated Handbook must use this form and are due by 5.00 pm on 1 December 2014.

Send submissions by email to with the subject line: Corporate Governance Handbook – Principles and Guidelines.


This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.

For more information
  • Glenn Joblin

    Partner Auckland
  • Andrew Petersen

    Partner Auckland
Related areas of expertise
  • Financial sector regulation
  • Litigation and dispute resolution
  • Corporate governance and advisory