A recent edition of the Institute of Directors’ Boardroom Magazine highlighted once more the significant increase in regulatory focus, compliance requirements and liability risks for directors. One statement in particular stands out; NZ Reg Co is seeing “issues arising where companies do not have the mature processes and escalation arrangements that you would expect to see in relation to compliance”.

An analysis of some of NZ Reg Co’s recent decisions echoes this further and reinforces the importance of a properly embedded governance framework for listed companies. Many of NZ Reg Co’s decisions relate to the contentious question of continuous disclosure – something that Boards continue to grapple with in a range of situations. Disclosure rules have intensified in recent years with the introduction of the constructive knowledge concept. This means that listed companies must disclose price-sensitive information – not only that which they are aware of, but also which they ought to be aware of.

When overlaid with the requirement to disclose ‘promptly and without delay’, listed companies must have a robust process in place to actively and regularly import information and metrics that can be filtered to establish whether any disclosure sensitivities exist. This is critical for management consideration and potentially even escalation to the Board or a Committee.


A proper governance framework allows your Board to put a structure in place to manage not only disclosure matters, but also the other things that an effective Board should be monitoring.

It also means that listed companies need to move beyond a ‘set-and-forget’ policy or relying on a last-minute call to seek legal advice when a sensitive situation arises. In fact, what you need to do is give your disclosure the attention it needs, make it clearly understood and ensure senior management and board members are actively managing it. This approach empowers your company to reach and disclose decisions in a compliant way, in the event of an unusual or sensitive situation.

We see that the regulators are much more interested in these matters, with the Spring edition of Boardroom also noting in an article headed “Regulators who come knocking” that “(Boards) would be wise to also take note of the shift in mood – from consumers, policymakers, and regulators. Regulators who come knocking are the new black.”

  • Is your company able to demonstrate full and proper deliberation and consideration of the relevant information should you be so required?
  • Have you recorded these and your decisions in a way that can demonstrate this in proper minutes and actions?
  • Can your company present a professional face to the regulator around Board operations and governance, in terms of awareness of the rules and regulations, systems and processes that reflect this and a record of doing so?

A proper governance framework allows your Board to put a structure in place to manage not only disclosure matters, but also the other things that an effective Board should be monitoring. This includes an annual reporting cycle covering all issues required by the regulations, internal policies and charters – ensuring that requirements are properly scheduled, and that items requiring advance work or warning are planned for. This is preferable to dealing with items on a stream of consciousness or reactive basis.


Missteps in the governance space are not well-received and potentially raise the cost of capital where a company is marked down for such incidents.

This kind of framework provides confidence that the statutory records and registers are all in place, allowing your management and Board to focus on strategy and execution; secure in the knowledge that if the regulator comes calling, they will see an orderly organisation with the right foundations in place for a properly governed listed entity.

The incentive in this space should not be based just around regulatory scrutiny. Market expectations from sophisticated investors – from both the debt and equity sides – are such that missteps in the governance space are not well-received, potentially raising the cost of capital where a company is marked down for avoidable governance slip ups. With the D&O insurance market hardening in recent years in the form of availability, terms and carve outs, and cost, these participants also are increasingly expectant of high functioning Board administration.

Developing a well thought out subcommittee calendar, implementing standard reporting formats and templates, collating papers, and distributing these well in advance with clear agendas, are key to ensuring your Board can operate smoothly and with confidence. Across the globe, companies are outsourcing affordable Board portal technology to support more effective and efficient Board administration. The growing demands of directors and expectations of regulators is likely to see this increase, with professional, high functioning Board administration and support becoming a much more important part of the toolkit.

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