ICANZ Welcomes Corporate Governance Framework

For immediate release 18 February 2004

ICANZ Welcomes Proposed Corporate Governance Framework

The Institute of Chartered Accountants of New Zealand (ICANZ) has welcomed the findings of the Securities Commission’s report Corporate Governance in New Zealand: Principles and Guidance.

The report, which has been presented to the Minister of Commerce, outlines a framework of governance principles against which corporates and other entities will be encouraged to report their governance practices.

ICANZ Chief Executive Garry Muriwai today described the report’s findings as “considered and balanced”.

“We are very pleased that the Commission has found that corporate governance in New Zealand is, by and large, of a high standard,” Mr Muriwai said.

“In the context of recent international governance failures, this positive affirmation will do much to reassure domestic and overseas investors of the overall integrity of the New Zealand market.”

Mr Muriwai said the Commission’s recommendation that entities should report against corporate governance principles supported by guidance was entirely appropriate for a small country like New Zealand.

“Complex and prescriptive regulation, particularly in the absence of any well-defined problems in New Zealand, would have posed an unacceptable risk to the proper functioning of our markets. This would have been counter to the interests of shareholders and other investors,” Mr Muriwai said.

He said the reporting framework proposed by the Securities Commission was a positive step to providing investors with an important aid in comparing entities’ governance practices and their level of disclosure. He expected entities to compete to demonstrate sound practices.

“It is investors who will be judge and jury on the quality of the disclosures and practices, not government administrators. This is appropriate. Well-informed investors are the best defence against poor practice, and are essential for driving a high performing market”, Mr Muriwai said.

In the meantime, ICANZ is considering what role it might play in supplementing the Securities Commission’s reporting framework.
“Raising the capability of directors and investors through education is one area ICANZ will be investigating in coming months”, Mr Muriwai said. "We will be talking to others, including the Institute of Directors, about the development of these proposals.

“Ensuring good corporate governance is definitely a ‘shared responsibility’. It is important that we all play our part in working towards practices that better promote a strong and dynamic economy for the benefit of New Zealand.”

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