Code of Private Equity Governance
7 September 2011
The Australian Private Equity and Venture Capital Association (AVCAL) has today released its Governance Code for the private equity industry.
Assistant Treasurer and Minister for Financial Services and Superannuation Bill Shorten welcomed the code at a launch today, saying: “I congratulate AVCAL on developing a Code of Private Equity Governance. Corporate governance is particularly important for private equity general partners given their active role in the management of the entities they invest in.
“As a growing and dynamic part of Australia’s financial services industry, I am keen to see private equity continue to improve Australia’s overall productivity and strengthen Australia as a financial services centre.”
AVCAL CEO Dr Katherine Woodthorpe said that the release of the Governance Code is an important milestone for the private equity industry.
“The Governance Code codifies many of the activities and governance mechanisms already being implemented by private equity industry participants.
“Formalising good governance practices by introducing the Governance Code means that we hold our industry up to high standards. It also demonstrates to our stakeholders that private equity invests over the long term to create structures and value that endure beyond private equity ownership.”
Dr Woodthorpe said that although AVCAL’s private equity and venture capital members already have a code of conduct and a number of other specific guidelines, codifying governance principles provides an even more robust and transparent framework for the industry.
“The new Governance Code has been drafted with reference to other corporate governance codes around the world, including the ASX Corporate Governance Principles and Recommendations, to provide assurance to stakeholders that private equity firms are responsible stewards of their investors’ capital and of the businesses they invest in.”
AVCAL members will be obliged to implement the code in a similar manner to the way ASX listed companies are obliged to implement the ASX Corporate Governance Principles and Recommendations, in that, if they elect not to adopt any aspect of the code, they must be in a position to explain why not - the “if not, why not” approach.
Dr Woodthorpe thanked the law firm Blake Dawson who worked closely with AVCAL on the compilation of the Governance Code.
Blake Dawson partner, David McManus, said that in drafting the code, AVCAL had to be aware that its members are drawn from all parts of the Australian private equity industry.
“The Governance Code is a document which has to work for all of AVCAL's members, wherever they operate within the private equity industry. That meant it had to be a principles based code that could be implemented by each private equity firm in light of the particular characteristics of their investments and their stakeholders. By adopting this approach, and by periodically reviewing the Governance Code, AVCAL will ensure that the code remains relevant to its members and a source of assurance to those who deal with the private equity industry.”
The Governance Code is part of AVCAL’s program of continuous development in industry standards, and follows the 2009 call by AVCAL Council encouraging its members to implement ESG (environmental, social and governance) practices such as those outlined by the UN-backed Principles for Responsible Investment (PRI) for Private Equity.
Media contact: Stuart Snell, ph +61 (0)2 8243 7001, (0)416 650 906, firstname.lastname@example.org
Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL