This year Australia (the ASX stock exchange) has amended its corporate governance code. The new codesets forth requirementsfor director induction programs and ongoingtraining, and requires companies tohave and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.
” Recommendation 2.6
A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.
The board or the nomination committee of a listed entity should regularly review whether the directors as a group have the skills, knowledge and familiarity with the entity and its operating environment required to fulfil their role on the board and on board committees effectively and, where any gaps are identified, consider what training or development could be undertaken to fill those gaps.
Where necessary, the entity should provide resources to help develop and maintain its directors’ skills and knowledge. This includes, in the case of a director who does not have specialist accounting skills or knowledge, ensuring that he or she has a sufficient understanding of accounting matters to fulfil his or her responsibilities in relation to the entity’s financial statements. It also includes, for all directors, ensuring that they receive ongoing briefings on developments in accounting standards.
[footnote 22] In ASIC v Healey & Ors  FCA 717 (available online at: http://www.austlii.edu.au/au/cases/cth/FCA/2011/717.html), the Federal Court held that it is the duty of every director of an entity subject to section 344 of the Corporations Act (which includes public companies, registered managed investment schemes and disclosing entities) to read the financial statements of the entity carefully and to consider whether what they disclose is consistent with the director’s own knowledge of the entity’s affairs. It is important that a listed entity’s board have a diverse range of skills and experience and this necessarily means that not all directors will have the same level of accounting skills and experience. Nevertheless, it is in the interests of a listed entity and its security holders (and also in the personal interests of the director concerned) that each director of the entity has an appropriate base level of understanding of accounting matters.
A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.
Having a board “skills matrix” is a useful tool that can help identify any gaps in the collective skills of the board that should be addressed as part of a listed entity’s professional development initiatives for directors (seerecommendation 2.6) and in its board succession planning.
Disclosing the mix of skills and diversity that a board currently has or is looking to achieve in its membership is useful information for investors and increases the accountability of the board on such matters. The disclosure need only be made collectively across the board as a whole, without identifying the presence or absence of particular skills by a particular director. Commercially sensitive information can be excluded.
The amended code takeseffect for a listed entity's first full financial year commencing on or after 1 July 2014.
Download the new ASX Corporate Governance Principles and Reccomendations
Web site of the ASX Corporate Governance Council