NZX confirms amendments to the NZX Corporate Governance Code 2023

Final amendments to the NZX Corporate Governance Code 2023

The NZX has recently confirmed amendments to the NZX Corporate Governance Code (Code), the NZX Listing Rules (Rules) and ESG Guidance Note following several rounds of consultation completed last year.

The amendments will become effective on 1 April 2023 and final versions of each document will be made available once they become effective on the NZX Rules and Guidance webpage. The amendments to the Code and ESG Guidance Note are currently available as mark-ups on the NZX’s Upcoming Rules & Guidance Changes page.

Reporting against the Code

In respect of financial years commencing on or after 1 April 2023, equity issuers must report against the amended Code (dated 1 April 2023).

In respect of financial years commencing before 1 April 2023, issuers must either continue to report against the previous version of the Code (dated 17 June 2022), or elect to voluntarily report against the amended Code, dated 1 April 2023. Issuers should clarify which version of the Code they are reporting against.

IoD’s earlier submissions in support of proposed changes to the Code have been adopted

The IoD’s earlier submissions in January 2022 and September 2022 provided general support for the NZX proposed changes to the Code and ESG Guidance Note, in recognition of the important role the Code has in improving corporate governance in New Zealand, and assisting directors to carry out their roles and responsibilities in a continually evolving corporate governance landscape.

The IoD continued to support the ‘comply or explain’ approach the NZX favoured (now confirmed in the updated Code), and encouraged the amended reporting requirements that provide for meaningful disclosure to owners and stakeholders, while avoiding creating a culture of ‘tick-box compliance’. (Refer Principle Four, “Reporting and Disclosure” of the amended Code, and the associated updated “ESG Guidance Note”).

The IoD consistently supported the changes proposed by the NZX (and now included in the amended Code and Guidance Notes) that recognised reporting requirements needed to align with other codes and practices issued by standard-setters and regulators, including the XRB’S climate-related disclosure standards, and the Protected Disclosures Act 2022. The IoD is pleased to see that these changes have now been finalised in the confirmed amendments to the Code.  (Refer Principle Four, “Reporting and Disclosure”, and the associated “ESG Guidance Note”, as well as Principle One, “Ethics”).

The IoD supported NZX proposals to ensure the Code clarifies the content and frequency of Code of Ethics training practices for their employees, and recognising the value of diverse boards and leadership teams in driving long term business sustainability and success. (Refer to Principle One “Ethics” and Principle Two, “Board Composition and Performance”)

The IoD also supported the establishment of the NZX Corporate Governance Institute to help raise governance standards across NZX listed entities through advice on a robust and up to date  governance code. A seasoned director and IoD Chartered Fellow, Anne Urlwin, being a member of the CGI also supports this outcome.