Skip to content
Subject guides

The ASX corporate governance principles, explained

The Summo Notes team9 min readUpdated September 2026
  • Eight principles
  • If not, why not
  • Not law
ASX corporate governance principles header, a board meeting in progress in an Australian office, printed papers across the table and one person speaking.

The ASX corporate governance principles are eight statements of what good governance looks like in a listed Australian company, published with recommendations under each one. They are not law. A listed entity reports against them on an if not, why not basis: follow a recommendation and say so, or depart from it and explain why. Neither choice is a breach. Saying nothing is.

On this page
  1. The one idea worth taking away
  2. Who it applies to
  3. How “if not, why not” works
  4. The eight principles, in four pairs
  5. Why it is not “comply or explain”
  6. The framework is being revised
  7. Where this sits in your subject
  8. Traps that cost easy marks
  9. Make it stick
  10. Questions people ask
  11. Keep going

The short version

  • Eight principles, each with recommendations under it, describing what good governance looks like in a listed Australian company.
  • They are not law. Nobody is fined for departing from a recommendation.
  • The whole thing runs on one rule: follow it and say so, or depart from it and explain why.
  • Saying nothing is the only real failure, and that is a listing rule matter.
  • The framework is under review, so check which version applies before you rely on any detail.
Jump to the checklist

The one idea worth taking away

Most people meet this framework and start memorising the eight principles. That is the wrong end of it.

The principles are the easy part. What makes the framework unusual is how compliance works. There is no obligation to follow any particular recommendation. There is an obligation to say what you did.

Get that straight and the rest falls into place.

This framework sits inside Ethics and Governance, one of the four compulsory CPA Program subjects.

Who it applies to

Entities listed on the Australian securities exchange. Not every company, not private companies, not partnerships.

That matters more than it sounds. A question about a family business or an unlisted subsidiary is not a question about this framework, and answering it as though it were is a straightforward way to lose marks. Governance ideas apply broadly. This particular framework does not.

How “if not, why not” works

The if not, why not reporting basisFor each recommendation, the entity either follows it, in which case it reports that it does, or does not follow it, in which case it reports that and explains why. Neither of those is a breach. Failing to report either way is the only failure.For each recommendationYou follow itYou do notReport that you doReport that, and explain whyNeither is a breach. Saying nothing is.
The reporting basis, in fullA high-level illustration of the method, not a substitute for the source.

Read the bottom box again, because it is the whole thing.

A company that departs from every recommendation and explains each departure clearly has done what the framework asks. A company that follows all of them and never says so has not.

That is unusual, and it is why the framework gets tested. Most rules punish the behaviour. This one is about the disclosure.

A company can depart from every recommendation and still be compliant, so long as it explains itself.

The eight principles, in four pairs

Eight items is more than most people hold. Four pairs is not.

The eight principles in four pairsFoundations covers setting out who does what and building a board with the right mix. Conduct covers acting lawfully and ethically and keeping the reporting honest. Transparency covers telling the market promptly and respecting the rights of security holders. Consequences covers finding and acting on risk, and paying people defensibly.Foundations1. Who does what, written down2. A board with the right mixConduct3. Act lawfully and ethically4. Keep the reporting honestTransparency5. Tell the market, promptly and evenly6. Respect security holders’ rightsConsequences7. Find risk and act on it8. Pay defensibly
The eight principles, grouped by what each pair is protectingA high-level grouping to aid recall. The pairing is ours, not part of the framework.

The pairing is a memory aid, not part of the framework, so do not present it as one in an answer. But it holds up. Each pair protects something: the structure, the behaviour, what outsiders can see, and what happens when things go right or wrong.

Under each principle sit recommendations, which are the specific practices. The fourth edition carries thirty five of them plus a few that apply only in limited cases. That count belongs to that edition, so check it rather than carrying it forward.

What to memorise, and what not to

Learn the eight principles and the reporting basis cold. Do not try to memorise every recommendation. Questions test whether you understand how the framework works and can apply a principle to a situation, and a recommendation you can half remember is worth less than a principle you can reason with.

Why it is not “comply or explain”

These get used interchangeably and they are not the same phrase.

“If not, why not” is the Australian formulation. “Comply or explain” is the United Kingdom one. They describe similar mechanisms, but attaching the wrong phrase to the wrong jurisdiction is a marker that you have learned the idea from the wrong source, and markers like that cost marks.

There is a shade of difference worth noticing too. “Comply” implies a default you are expected to meet. “If not, why not” is more neutral about it: the framework asks what you did and why, without presuming the recommendation was the right answer for you.

Exam trap

The trap that catches most people is reading either phrase as a penalty. Neither is. Departing from a recommendation is a legitimate choice, and for some entities it is the sensible one. A small board might reasonably decide a separate committee for everything is overhead it cannot justify. What is not legitimate is departing quietly.

The framework is being revised

The fourth edition is the one in force. A draft fifth edition has been released for public consultation, and the body responsible has said it intends to settle final changes before the end of the year.

The durable parts survive it. The draft keeps eight principles and keeps the if not, why not basis, so the shape of the framework and the mechanism this page describes are not what is changing. The detail underneath is.

Practical consequence: learn the structure and the mechanism now, and confirm the specific recommendations against whichever version applies to your sitting rather than against a summary written earlier. That is good practice for any framework under revision, not just this one.

Where this sits in your subject

Must know
The if not, why not basisHow it works, that it is not law, and that the failure mode is silence rather than departure. This is the part that gets tested and the part most people get wrong.
Should know
The eight principlesBy name and by what each one protects, well enough to apply one to a scenario. Four pairs is the fastest way in.
Worth a pass
The recommendations underneathKnow that they exist, know roughly what kind of practices they cover, and know they change between editions. Do not memorise the list.

Governance is the heavier half of the CPA Program’s Ethics and Governance subject, and this framework sits inside the practical side of it, alongside the board, its committees and directors’ duties. It rewards understanding over recall, which is the same thing the rest of that subject rewards.

Traps that cost easy marks

The five that catch people

Treating the principles as law, when nothing here is enforceable that way. Applying the framework to an entity it does not cover, such as a private company. Saying “comply or explain” when the Australian phrase is “if not, why not”. Reading a departure as a breach, when a well-explained departure is exactly what the framework contemplates. And reciting recommendations from an older edition without checking which one applies.

Make it stick

Before your exam

0 of 6 done

Six drills that turn this from eight things to remember into one idea you can apply. Progress saves in your browser.

Nice. That is the hard thinking done.

Get the first and fourth of those cold and you can reason your way through most of what this topic asks.

Questions people ask

Are the ASX corporate governance principles law?
No. They are not legislation and there is no penalty for departing from a recommendation. What is required, under the listing rules, is that a listed entity discloses whether it followed each recommendation and, where it did not, explains why. The obligation is the disclosure, not the practice.
What does "if not, why not" actually mean?
For each recommendation, an entity either follows it and reports that it does, or departs from it and reports that along with its reasons. Both are acceptable outcomes. Failing to report either way is the failure.
Is "if not, why not" the same as "comply or explain"?
They describe similar mechanisms but they are different phrases from different jurisdictions. "If not, why not" is the Australian one. "Comply or explain" is the United Kingdom one. Using the wrong phrase for the wrong country is a common and avoidable error.
Who do the principles apply to?
Entities listed on the Australian securities exchange. Private companies, partnerships and unlisted entities are outside the framework, although the underlying governance ideas are useful anywhere.
Do I need to memorise all the recommendations?
No, and it is a poor use of study time. Learn the eight principles and how the reporting basis works. The recommendations change between editions, and the marks are in applying a principle to a situation rather than reciting a list.

Want the governance half already condensed?

Our Ethics and Governance pack puts the governance concepts and committee structures on a page, with practice exams and worked solutions so you can rehearse the written method under time.

See the Ethics and Governance pack

Keep going

This framework is one piece of the governance half. See where it fits in the Ethics and Governance study guide, which covers the board, its committees and directors’ duties alongside it. If you are working out where to spend your hours, how to find the topics that carry the marks is the method behind why governance comes first.