Most Read Contributor in New Zealand, September 2016
Issuers may have to disclose the gender composition of their
Boards and senior management teams under a change NZX is proposing
to its Main Board Listing Rules.
Submissions close on 30 May 2012.
Diversity to be disclosed in annual reports
The proposal would require an issuer to include in its annual
a breakdown of the gender composition of each of the board, the
senior management team and any subsidiary board, and
a statement from the board evaluating the issuer's
performance with respect to its diversity policy.
Issuers may choose to also disclose any general or wider
diversity policies or practices they have in place. This might
include such matters as the age composition of boards and senior
management teams – another 'hot' diversity topic
Diversity information is a key value indicator
NZX justifies the move on the basis that the evidence shows a
correlation between gender diversity and improved performance at
higher management levels.
According to the Human Rights Commission's
2010 'Women's Participation' Census, among the NZSX
100 companies, women hold only 9.3% of board directorships and 21%
of management positions reporting directly to the CEO.
Chapman Tripp comments
Diversity at higher management levels is a good thing. But it is
revealing that the NZX has chosen diversity disclosure over other
performance enhancing measures, like EVA (economic value
The proposal sends the message that the leading way of improving
issuer performance is by increasing gender diversity. Which is
controversial – and arguably a decision better left to a
regulator than a market operator. (
Chalkie expresses similar views).
The focus on subsidiary boards is a little odd – the
current NZX proposal does not contain any materiality threshold,
and in practice subsidiary boards are often served by senior
management, which NZX also propose issuers report on.
The Australian Securities Exchange (ASX) also recommends issuers
annually disclose measurable objectives for assessing gender
diversity, and a description on progress against those objectives.
NZX's draft has preferred a quantitative focus over more
Within 18 months of ASX's rule changes, there was a
50% increase in the number of women directors. This dramatic
rise may be explained in part by the
federal government's threat to impose quotas unless gender
diversity on Australian boards improved.
Helpfully, ASX released guidance
notes on how to comply with its diversity guidelines. The NZX
should consider doing the same here.
Mandatory gender quotas are being signalled for the EU. But we
think the risk of unsuitable candidates being appointed to boards
to fill quota obligations outweighs any benefit in guaranteeing a
certain proportion of women on Boards and senior management
The information in this article is for informative purposes
only and should not be relied on as legal advice. Please contact
Chapman Tripp for advice tailored to your situation.
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Lawyers are pretty good at figuring it out quietly and amicably among themselves, without recourse to a public courtroom.
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