New Corporate Governance Standards for PNGX Listed Companies
Companies listed on the PNG National Stock Exchange will know that new Listing Rules become effective on 3 July 2023. As before, listed companies are required to have a Corporate Governance Policy which is appropriate for the company. However, the Policy is now required, at a minimum, to address each recommendation in the PNGX Corporate Governance Standards (Listing Rule 17.1). If the company does not follow a recommendation it is required to state, why not (Listing Rule (Listing Rule 17.3).
The Standards were developed in conjunction with the International Finance Corporation and the UN Sustainable Stock Exchange Initiative. In its Consultation Paper PNGX stated that “whilst the scope of PNGX is limited to listed companies, it is hoped that the governance standards become a benchmark for corporate governance by the private sector in PNG generally”.
Because the Standards have been designed to be “locally relevant…to support the development and sustainability of the local economy” they will be a useful guide for local companies in countries throughout the Pacific, which share many challenges in common with PNG.
Listed companies will be required to report against the Standards for the financial year ending 31 December 2023, so that companies will need to be developing their Corporate Governance Policies now. This should not be treated as a “box ticking” exercise, but one in which the company’s leadership, including the Board, is integrally involved with.
If the Standards are “to lift the reputation of PNG, improve its ability to attract investment and lower the cost of capital for the country” as stated in the Consultation Paper, their adoption and implementation by companies must be meaningful.