Corporate Governance, Corporate Responsibility and Law: Disclosure of Non-financial Information: A Powerful Corporate Governance Tool
(2016) 34 Corporate & Securities Law Journal 69
7 Pages Posted: 29 Apr 2016 Last revised: 18 Sep 2019
Date Written: 2016
Disclosure of information has been part of company law for a very long time. It will be recalled that there was a time when nobody contracting with a company could rely on the fact that they did not know of a particular provision in a company's Memorandum of Association or Articles of Association - these documents were "public documents" and accessible to anybody and, thus the notorious "doctrine of constructive notice" applied. That doctrine has been abolished. However, the disclosure of information about companies is still one of the main pillars of our corporations law. Under ASX Listing Rule 3.1 listed entities are expected to immediately disclose "material" information. The "continuous disclosure" regime is also embedded through statutory provisions. Furthermore, financial information must also be disclosed in corporations' financial statements and directors' reports. As will be seen below, apart from these regulatory or statutory required information to be disclosed, under the ASX Corporate Governance Council's Corporate Governance Code ("the Australian Corporate Governance Code"), Corporate Governance Principles and Recommendations, there is also an expectation that listed companies should adopt certain policies and disclose these policies.
The main focus of this section note is, however, on the disclosure of non-financial information on a totally voluntary basis. Why do corporations disclose non-financial information if not required to do so under law? In disclosing this information, do corporations become better "corporate citizens" accepting wider responsibilities than in the past? Should we move away from a "soft law approach" and, like in the European Union (EU), make it mandatory for large undertakings, to disclose non-financial information?
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