Governance news bites – 5 September

There have been a few media articles of particular relevance to governance in the past two weeks. Among the governance-related stories you may have missed are: 

Reductions in financial sector director liability

There have been ongoing concerns from directors about their liabilities as directors of companies in the financial sectors. On 4 September 2024, the Minister of Commerce and Consumer Affairs announced a range of changes to the Credit Contracts and Consumer Finance Act (CCCFA). These include removing the personal liability of directors (and senior managers) of entities that lend to consumers (not businesses), once the legislative change has been made. The Minister has suggested that other measures are in place to ensure lenders act responsibly without the need for directors to be personally liable. 

Boards under pressure – rethinking board practices

The pressures on boards keep increasing. The 2024/2025 Directors’ Fees Report reflects this increased complexity and demands on directors and boards. A recent paper, Under Pressure—Rethinking Board Practices offers ways for boards to manage this by rethinking board resourcing (which might extend to advisory boards to draw on a wider set of expertise), the extent of director commitments, the way board committees work and the nature of them, and the way the boards themselves operate (notably the nature of board pre-reading, virtual meeting arrangements and the structure of agendas). 

Diversity reporting is alive and well for US companies

We keep hearing that companies in the United States are under pressure to step back from a focus on diversity, equity and inclusion (DEI), as evidenced by recent news about John Deere and Harley-Davidson. You might expect reductions in reporting to accompany this pressure. A recent analysis by KPMG US suggests that board diversity disclosures for S&P 500 and Russell 3000 companies had continued at a high level through to 30 June 2024. This includes the inclusion of diversity considerations in board selection and their own diversity. 

Criminal complaint against a former board chair by the current chair

Many may be familiar with the financial issues facing Rex Airlines in Australia. Indeed, if you were flying with them, in many cases you aren’t now as a substantial portion of their flights are currently grounded. In the midst of financial issues, it’s been recently reported that current Rex chair has filed a criminal complaint against the airline’s former chair. It is alleged the that former chair recorded the final Rex board meeting and offered the recording to a journalist. The allegation is that other board members had not given the required consent for the recording. Whoever said governance was boring?