Independent Governance Reviews
Independent Governance Reviews
David Cantrick-Brooks | 25/04/2025

Governance reviews are an important part of good governance and can be administered by the company secretary (as an internal governance review) or an external consultant (as an external governance review), with the latter being someone who is versed in undertaking such activities and who has access to high quality comparative data and can draw upon their vast experience, to interpret the results and provide meaningful and valuable insights.

Some regulators require organisations to undertake periodic independent governance reviews as a way of ensuring that they are being governed in an appropriate way, in line with laws, rules and regulations, as well as community expectations.

For some companies an external (independent) governance review is considered an important part of good corporate governance hygiene, even though it may not be mandated by a regulator (refer to ‘Guidance from Regulators’ below).

There are a number of advantages in undertaking a periodic independent governance review – facilitated or managed by a competent expert / external consultant.These can include:

Service Providers

There are a number of very good third party service providers to choose from, including Board Benchmarking, Effective Governance and Governance in Action Pty Ltd (aside from the ‘Big 4’ accounting firms and other large management consultants).

Guidance from Regulators

Guidance from a number of key regulators is briefly summarised below.

ASIC

No reference to independent governance reviews or any requirement for same by companies.

ASX

Not mandated, but independent reviews are often undertaken every 3 years (and every 2 years in some cases) as a matter of good practice by a number of companies in the top 200.Refer to Recommendation 1.6 in the ASX Corporate Governance Principles and Recommendations (4th edition).Note: The board should consider periodically using external facilitators to conduct its performance reviews.

APRA

Not currently mandated.

There is a current proposal to require SFIs to commission a qualified independent third-party performance assessment at least every three years which covers the board, committees and individual directors (refer Governance review: Discussion paper, March 2025).

ACNC

Aside from compliance reviews conducted by the ACNC (itself) in response to significant and systemic breaches, there is no requirement to conduct an independent governance review.It remains good practice for many registered charities to undertake an independent governance review periodically.

TEQSA

The Tertiary Education Quality and Standards Agency (TEQSA) is the most insistent regulator in this area.

Standard 6.1.3d of the Higher Education Standards Framework (Threshold Standards) 2021 requires the governing body to undertake periodic independent governance reviews as follows:

The governing body attends to governance functions and processes diligently and effectively, including: (d) undertaking periodic (at least every seven years) independent reviews of the effectiveness of the governing body and academic governance processes and ensuring that the findings of such reviews are considered by a competent body or officer(s) and that agreed actions are implemented.

When to conduct an independent governance review

Best to avoid the busiest times of year, so after the annual financial results are released, but before the AGM, might be an appropriate time (e.g. early November, for companies with a 30 June balance date), so the results can be discussed before the end of the calendar year. This timing also provides the board with an opportunity to reflect on management’s performance during the financial year.

360-degree reviews

Some companies invite management (senior executives) to provide feedback on the board’s performance.This can be accommodated within an independent governance review.A 360-degree review would certainly be best facilitated by an external party.

Concluding Comments

Whilst most regulators (aside from TEQSA) do not mandate independent governance reviews, it remains good practice for companies with significant brand reputations to protect to use them, especially if there have been some really significant events which have called into question the board’s performance.Readers might be interested in the Qantas Governance Review Report (8 August 2024) in this regard (for example).

As Kirsten Alice Smith, Principal at Board Benchmarking, points out …

Best practice for board reviews follows a structured cycle—a formal external review every three years, with internal reviews in the intervening years. This approach ensures that boards receive independent, benchmarked insights on a regular basis while also maintaining … accountability and continuous improvement. External reviews provide an objective assessment, comparing board performance to industry best practices, while internal reviews help boards track progress on recommendations and address emerging governance issues.

Selected References

https://www.asx.com.au/content/dam/asx/about/corporate-governance-council/issues-to-consider-in-board-evaluations.pdf

https://www.governanceinstitute.com.au/news_media/the-reality-of-board-reviews-internal-vs-external-approaches/

https://www.aicd.com.au/board-of-directors/performance/evaluations.html

https://www.aicd.com.au/board-of-directors/diversity/women/board-evaluation.html

https://www.herbertsmithfreehills.com/insights/2023-06/getting-bang-for-buck-with-board-performance-reviews

https://www.effectivegovernance.com.au/page/knowledge-centre/news-articles/how-often-should-you-review-your-board

https://sodali.com/resources/insights/board-reviews-an-integral-part-of-good-corporate-governance

https://www.brightlaw.com.au/apra-governance-standards-review/

https://www.allens.com.au/insights-news/insights/2025/03/apra-releases-discussion-paper-on-governance-proposing-more-prescriptive-requirements-for-banks-insurers-and-rse-licensees/

https://www.qantasnewsroom.com.au/wp-content/uploads/2024/08/QANTAS-BOARD-GOVERNANCE-REVIEW-REPORT.pdf

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