The financial regulator has taken a thinly-veiled swipe at board members of ASX companies, such as Mineral Resources and WiseTech, over failing to hold CEOs to account for poor behaviour.
In a speech on Wednesday, Joe Longo, chair of the Australian Securities and Investments Commission, argues corporate boards need to exhibit greater scrutiny.
It follows several high-profile scandals in recent times, including allegations of inappropriate behaviour levelled at WiseTech CEO Richard White and the alleged involvement in a tax evasion scheme by MinRes founder Chris Ellison.
“Effective governance requires rigorous, diligent back-and-forth between management and the board,” Mr Longo will tell the Institute of Company Directors’ Australian Governance Summit in Sydney.
“The board should support management – but it must also question it.”
He says boards cannot simply rely on the judgment of management if they are aware of information that arouses suspicion.
“The health of the relationship between a board and senior management is, I would say, also at the heart of several well-publicised issues in recent times,” Mr Longo says.
“Some of these issues, and many that ASIC deals with, start with poor personal behaviour before turning into more serious corporate misconduct.
“Now, not all poor personal behaviour leads to governance issues, but governance issues allow poor personal behaviour to thrive.”
Mr Longo doesn’t explicitly name any individual companies but his criticism mirrors that levelled at boards recently hit by scandal.
Mr Longo says having a broader range of knowledge would also help boards make informed decisions and better carry out their critical functions.
He outlines the need for more scientific and technological expertise, arguing not enough companies have enough relevant experience to draw on as they navigate challenges such as AI and cyber security.
“Last year the average number of board members with an accounting, banking, or finance background rose to 40 per cent, and the combined total of those with a legal background, finance background, and general management was 70 per cent,” Mr Longo says.
“By contrast, those with a background in technology was just seven per cent.”
Mr Longo concedes ASIC has its own deficiencies, but overly-complex regulation is also hamstringing the watchdog.
ASIC recently convened its first regulatory simplification working group, which Mr Longo co-chairs with Viva Energy board member Nicola Wakefield-Evans.
“The first thing we want to consider is what we at ASIC can change about our approach,” he says.
“For example, we know that ASIC’s information needs to be easier to find and navigate – from our regulatory guides to our website – and that we need to ease the burden of breach reporting and better explain our data requests.”
The group will release a discussion paper toward the third quarter of 2025.
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