The draft fifth edition of the ASX Corporate Governance Principles and Recommendations proposes significant governance reforms designed to simplify reporting, reduce prescriptive requirements and place greater emphasis on governance outcomes. Minerva has supported the overall direction, but has argued that simplification should be judged against a single test: do investors retain access to clear, comparable and decision-useful information?

While several of the proposed changes meet that test, others risk making governance reporting harder to compare, interpret or locate. These include proposals affecting board skills disclosure, director independence and the accessibility of governance information.

The consultation closed on 14 September 2026 and the final recommendations are expected to go to the ASX board before the end of the year. Minerva’s full consultation response can be found here.

"If not, why not" depends on the quality of the explanation

One of the draft's central proposals is to reinforce the existing "if not, why not" framework while drawing a clearer distinction between Principles, Recommendations and Explanatory Material.

Minerva supports retaining the "if not, why not" approach. It remains one of the strengths of the Australian governance framework because it allows boards flexibility while preserving accountability. However, that flexibility only works when explanations are meaningful.

When a company departs from a recommendation, investors need more than a statement of non-compliance. They need to understand the alternative approach, why it was adopted and how it supports the underlying governance objective. As the framework becomes more principles-based, the quality of those explanations becomes more important, not less.

Removing duplication should not reduce investor usability

The draft proposes removing or relocating some recommendations where the same subject is already covered by legislation, regulatory requirements or other reporting obligations. One example is Recommendation 7.4, where environmental and social risk disclosure would no longer be treated separately within the corporate governance framework.

Minerva supports reducing genuine duplication, including changes intended to avoid overlap with sustainability reporting requirements. However, Minerva does not support removing recommendations solely because a legal obligation exists elsewhere.

The Principles serve a different purpose from legislation. They provide investors with a practical and consistent framework for locating and assessing governance information. Minerva has therefore recommended that ASX apply a decision-usefulness test before removing any recommendation: would the change make information less clear, less accessible or less comparable for investors? If so, the recommendation may still serve a useful purpose.

Board capability still needs structured disclosure

Draft Recommendation 2.2 proposes replacing the current expectation that companies disclose a board skills matrix with a broader requirement to explain the mix of skills, knowledge and experience the board considers necessary.

Minerva supports the increased focus on board capability but does not support removing the skills matrix expectation altogether.

A skills matrix provides investors with a structured view of board capabilities, succession priorities and potential gaps. Narrative explanation can provide useful context, but it does not necessarily allow consistent comparison between issuers.

Minerva has therefore recommended retaining a board skills matrix requirement while allowing flexibility over its format. The objective should be meaningful disclosure of board capability rather than a standardised template.

Independence requires judgement and safeguards

Draft Recommendation 2.4 would consolidate existing independence requirements and place greater emphasis on board judgement when assessing whether a director is independent. The proposal would also move established independence indicators into Explanatory Material and remove the explicit three-year cooling-off period currently associated with certain relationships.

Minerva broadly supports a more contextual approach to independence and agrees that independence cannot be determined through a purely mechanical test.

However, Minerva is concerned that reducing the prominence of established independence indicators may weaken comparability between companies. The submission also questions the proposal to increase the shareholder threshold used as an indicator of potential influence from 5 per cent to 10 per cent.

Minerva has recommended that any move towards greater board judgement be accompanied by stronger explanation. Investors should be able to understand how boards reached independence determinations and what safeguards have been applied where potential conflicts exist.

Culture reporting should focus on board oversight

The draft revises Principle 3 by shifting attention away from the publication of specified policies and towards board oversight of culture, values and conduct.

Minerva supports the change in emphasis. Investors need to understand not only whether policies exist, but how boards monitor culture, assess findings and respond to emerging concerns.

However, Minerva has cautioned that moving areas such as whistleblowing, anti-bribery and diversity into Explanatory Material should not reduce transparency. Investors should still be able to understand the governance mechanisms through which boards oversee these issues and how information reaches the board.

Disclosure must remain accessible

The draft also proposes simplifying Appendix 4G. Appendix 4G currently acts as a disclosure map, directing investors to where governance recommendations are addressed and where any "if not, why not" explanations can be found.

Minerva supports simplification but recommends retaining Appendix 4G's core role as a navigation tool.

If more governance information moves onto company websites under the fifth edition, effective signposting will become more important, not less. Investors should still be able to locate governance disclosures quickly, compare them consistently across issuers and access historic information where necessary.

A shorter governance framework will not be more useful if the underlying information becomes harder to find.

Governance codes and the role of stock exchanges

One feature of the consultation deserves wider attention. Unlike the UK’s Financial Reporting Council, which is focused on governance and reporting standards as an independent body, the ASX occupies a dual role as both a commercial market operator and the custodian of the corporate governance framework.

That position inevitably creates a  tension: the exchange has a legitimate interest in keeping the framework practical and proportionate for listed companies; investors depend on a commercial operator to protect shareholders rights and to promote transparency, comparability and accountability. The challenge for the fifth edition is therefore not simply to reduce burden or streamline disclosure, but to maintain confidence that simplification serves the quality of governance reporting rather than the convenience of reporting.

The strongest outcome would be a framework that is easier for companies to navigate while preserving the information investors need to make informed judgements.

What investors should watch

When the final fifth edition is finally published, four questions need to be asked:

• Does Recommendation 2.2 retain structured disclosure of board capability?
• Does Recommendation 2.4 provide sufficient transparency around independence assessments?
• What information has been moved from reportable recommendations into Explanatory Material?
• Does Appendix 4G continue to provide a reliable route to governance disclosures?

The draft's emphasis on outcomes rather than procedural compliance is broadly welcome. The success of the reforms, however, will depend on whether simplification preserves the information investors need to assess their boards’ capability, independence, accountability and governance quality.

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