A more activist shareholder culture, more boardroom diversity, more intense accountability and enhanced disclosure requirements are among the themes identified in Chapman Tripp's Corporate Governance Trends and Insights report.
The firm has also developed a comprehensive data series based on the 2016 annual reports of the top 75 listed issuers by market value. This includes statistics on board composition, size, frequency of meetings and length of service and will be updated in subsequent years.
"We hope this publication will play a useful role in raising the profile of New Zealand corporate governance. We think that interest in this will increase as more people enter the listed security markets," said Chapman Tripp partner Roger Wallis.
"We expect market participation rates will grow over the next 20 years due to a number of factors, both economic and technological. These include:
- an appetite among 'generation rent' for assets requiring less up-front capital, and
- entrepreneurial opportunities created by the internet both in realising good ideas and in commercialising them, and
- continued growth in KiwiSaver and personal savings.
"Other relevant developments are that:
- the ability to participate in AGMs on-line will encourage more shareholder engagement as the "digital natives" start to join the shareholder population, and
- the quality of information available to shareholders, particularly relating to a company's risk profile, will become sharper as the more informative Key Audit Matters (KAM) reporting becomes entrenched. This requires auditors to identify prominently those issues judged most significant or concerning in the conduct of the audit.
"The recently updated NZX Corporate Governance Code will also be a driver for change, notably in the areas of company strategy, diversity, remuneration and environmental, economic and social (ESG) reporting.
"Directors will need to negotiate all of these push points, while also dealing with rapidly emerging accountabilities in relation to managing the effects on the company and on shareholders of climate change and artificial intelligence (AI). AI, in particular, has the potential to create big winners and big losers, so good governance will be essential.
"This is an exciting and a challenging time to be a director. Knowledge of legal requirements and of wider social and economic trends will be critical. Chapman Tripp is committed to making a positive contribution to this task," Wallis said.
View the report here.
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.