Board Skills in Focus: Emerging Trends in Disclosure and ASX Governance Developments

Proposed revisions to the ASX Principles and Recommendations are in sight 10 min read

The new Advisory Group on Corporate Governance (the AGCG) is currently considering proposed revisions to the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (the ASX Principles and Recommendations), in advance of public consultation on the proposed revisions, anticipated to commence in mid-July.

Ahead of the consultation process, we consider in this Insight the ongoing stakeholder and regulatory focus on boards and director skills, analyse some recent trends in board skills reporting among ASX50 companies, unpack developments since the decision to withdraw the previous 5th edition of the ASX Principles and Recommendations, and look at what we can expect in this space following the AGCG's review.

Key takeaways

• Directors' skillsets—both as a board and individually—remain a central focus of regulators and investors, with increasing expectations that boards can demonstrate not only the existence of relevant skills, but how those skills are deployed in practice to manage risks and opportunities.
• While ASIC's recent enforcement action against several former directors and officers of an ASX-listed entity did not re-shape the law on directors' duties, it highlighted that what a company discloses to the market regarding its board and the skills of its directors—and how it says its board operates—may ultimately become the statements against which its directors are judged.
• Board skills reporting is expected to remain a key governance focus as the AGCG reviews the ASX Principles and Recommendations. While the revised framework is likely to streamline guidance, boards will continue to face pressure to demonstrate that they have the skills and experience needed to oversee emerging risks and opportunities, particularly in rapidly evolving areas.
• Board skills reporting continues to be characterised by significant variation in market practice among listed entities. However, there has been a clear shift towards more sophisticated disclosure, with ASX50 entities increasingly adopting graded skills matrices to provide greater transparency on the depth of directors’ expertise.
• In addition, there has been an increase in disclosure of boards holding certain emerging skills—namely, expertise in cyber and artificial intelligence (AI).

Background

Under Recommendation 2.2 of the ASX Principles and Recommendations (4th edition, 2019), boards of listed companies are encouraged to inform the market of the skills their board has or is looking to achieve, using skills matrices. The 4^th edition of the ASX Principles and Recommendations remains in effect following the ASX Corporate Governance Council announcing in February 2025 that it had been unable to reach agreement on the proposed 5th edition. This followed considerable media focus on the proposed changes in the 5^th edition, which included additional disclosure requirements regarding board skills matrices and director skills assessment procedures.

Since then, we have seen the establishment of the AGCG to replace the earlier ASX Corporate Governance Council. The AGCG has indicated it will retain the existing eight principles and the 'if not, why not' approach to disclosure, but has highlighted that the general principles may be satisfied through alternative governance practices. 

Director skills on the radar of stakeholders and regulators

Investors continue to treat board skills matrices as a valuable tool in understanding the skills and experience of existing directors, and in assessing whether the board is equipped to effectively manage key risks and opportunities for the company.

Regulators are also maintaining their focus on directors' duties and board composition. Since 2022, one of the enduring priorities of the Australian Securities and Investments Commission (ASIC) has been a focus on governance and directors' duties failures. ASIC has highlighted potential concerns with the lack of diversity in the experience and training of directors. In a speech last year, ASIC's then chair, Joe Longo, pointed to the fact that ~70% of directors of listed entities have legal, financial or general management backgrounds. However, fewer directors have experience in data, technology, systems and processes, which ASIC sees as critical in navigating technological and regulatory disruption and future trends.

On 16 June 2026, the Australian Prudential Regulation Authority (APRA) released for public consultation a draft standard CPS 510 Governance (Draft CPS 510), as part of its governance review for APRA-regulated entities (banks, insurers and superannuation). One of the key focus areas of APRA's governance review has been director skills and capability, board performance reviews and director tenure. Similar to Recommendation 2.2 in the ASX Principles and Recommendations, Draft CPS 510 provides that regulated entities must maintain a board skills matrix, documenting the skills, experience and behavioural attributes required for the board to perform effectively. However, it goes further, to require that the matrix include a clear assessment criteria and rating scales of proficiency that can be measured and verified, and that the board take all reasonable steps to ensure it has the necessary skills, and can demonstrate how it is actively addressing any current or future skill and capability deficiencies. Additionally, Draft CPS 510 includes a proposed 12-year tenure limit for non-executive directors (reflecting a less restrictive approach than in the earlier discussions of a 10-year tenure limit), with the ability to request that the board approve a 12-month extension in exceptional circumstances.  

On the enforcement side, recent regulatory enforcement action against several former directors and officers of an ASX-listed entity¹ has put a spotlight on the standard expected of directors. While the decision affirmed an orthodox approach to interpreting and applying the existing duties, it crisply endorses an active governance model, in reinforcing that a director's duty of care and diligence requires directors to test and challenge management, scrutinise information and processes, and stay informed about the company’s operations and risk environment. The close examination in this case of the company's own governance disclosures also highlights that these disclosures are not merely aspirational statements but that a court may treat them as evidence of the board's intended role, responsibilities and decision-making processes. As companies continue to evolve and expand their reporting on board skills, experience and governance practices, they should expect those disclosures to shape the standard against which board conduct is assessed. While the law on directors' duties did not change as a result of this case, it has highlighted that what a company discloses to the market regarding its board and the skills of its directors—and how it says its board operates—may ultimately become the statements against which its directors are judged.

Recent trends in board skills reporting for ASX50 companies

Against this backdrop, we've seen a number of recent developments in board skills reporting among ASX50 companies. The below analysis is based on the skills matrices in the annual reports or corporate governance statements of ASX50 companies² for their respective 2021 financial year (FY21) through to their 2025 financial year (FY25), together with our experience working with listed entities in this space.

Structure of board skills reporting

Board skills reporting continues to be characterised by significant variation in market practice among listed entities. In the absence of a prescribed format for a board skills matrix, listed entities have the discretion to present their board skills matrix in any style, provided that the matrix lists the skills that the board currently has or is looking to achieve in its membership (as per Recommendation 2.2 of the ASX Principles and Recommendations).

Among the ASX50, we identified three general reporting styles:

1. Collective reporting: this is the minimum standard of reporting recommended under Recommendation 2.2. It involves an entity listing the skills that the board currently has or is looking to achieve in its membership³, without identifying the number of directors that do or not have each particular skill.
2. Binary reporting: this style of reporting sets out a list of skills (as is the case with the collective reporting style), plus a graphic or number to denote the number of directors (on an anonymised basis) that do or do not have each particular skill.
3. Graded reporting: this is the most fulsome approach, which sets out a list of skills, plus a graphic or numbers that then, in addition to binary reporting, grade the directors (on an anonymised basis) on their expertise and capability as to each particular skill. Graded reporting typically features tiers of expertise and capability.

Since FY21, the proportion of ASX50 entities that have adopted the graded reporting style has increased year on year, with a consequential decline in the use of the binary and collective reporting styles.

As we have seen in previous years, although the graded reporting style generally lends itself to greater transparency, the terminology used to 'grade' directors continues to vary as between the ASX50. The most commonly used grading terminology includes measuring directors' expertise in the relevant skill in the following categories: (1) awareness, (2) practised or (3) high.⁴

No material change in the average number of skills reported

Across the ASX50, the average number of skills included in board skills matrices has remained consistent year on year since FY21. This demonstrates a shared understanding across boards regarding the fundamental skills required of their directors. On average, boards were assessed on 12 skills (within a range from seven skills up to 35 skills) in FY24, with this moving to an average of 11 skills (within a narrower range from eight skills up to 27 skills) in FY25.⁵

Emerging board skills

Across the ASX50 cohort, unsurprisingly, boards continue to comprise directors with skills in foundational areas such as finance, legal, governance, risk and strategy. However, we are seeing listed entities increasingly disclosing additional emerging competencies, such as sustainability, data and analytics, cyber and AI-related skills. The following graph shows the frequency at which ASX50 companies disclosed these emerging board skills within their board skills matrices in FY25, whether as a standalone skill or referenced within a skill description.

The number of ASX50 companies recognising specific skills pertaining to 'sustainability' (as a standalone skill or within a skill description) increased markedly, from 21 in FY24 to 33 in FY25, which may in part reflect the broader focus on mandatory sustainability reporting in Australia.

ASX50 companies disclosing 'cyber' as a standalone skill or within a broader skill description has increased consistently throughout FY21 to FY25, growing from nine companies in FY21 to 31 companies in FY25.

In FY21, no ASX50 companies identified 'artificial intelligence' in their board skills matrix (either as a standalone skill or referenced within a skill description). Since FY22, the number of ASX50 companies reporting on directors' skills regarding AI has increased from 2% to 16%, with companies generally choosing to capture AI within the description of a broader skill (such as technology and digital product, or technology and innovation). We expect these numbers will continue to rise, given the wide-scale adoption of AI in Australian public companies, and as AI embeds itself as a core governance, risk and strategy issue, and not just a technical matter. Numerous ASX50 companies disclosed in their annual reports or corporate governance statements that their directors were trained in AI use throughout FY25.

Boards should also be mindful of over-reliance on a specialist director. When appointing a director with a specialist skill to a board, directors should not rely too heavily (or beyond what is reasonable) on the input of that director. The board as a whole should continue to maintain a sufficient level of understanding of the key issues, as, ultimately, it is the board as a whole that makes decisions.

Increase in disclosure of governance and international experience

The proportion of ASX50 companies disclosing 'governance' as a standalone skill held by the board or its directors (as applicable) has increased by 30% since FY22, rising from 26 companies in FY22 to 41 in FY25. This trend reflects heightened awareness among ASX50 companies of regulatory expectations regarding robust corporate governance practices.

The number of ASX50 companies identifying 'international' or 'global' experience in their board skills matrix (as a standalone skill or referenced within a skill description) has increased by around 10% since FY21. This may reflect the growing significance of, and uncertainty around, the impacts of geopolitics, including in relation to global supply chains and supply chain disruption.

Future of board skills reporting

With the AGCG expected to release the revised ASX Principles and Recommendations for public consultation in the coming days/weeks, board skills reporting is likely to continue to be a key area of focus.

We anticipate a streamlined set of ASX Principles and Recommendations, with the AGCG highlighting that new explanatory material will replace the existing detailed commentary– this is intended to assist companies in satisfying the recommendations, rather than creating additional compliance and reporting obligations.  

The AGCG has recognised the value of diverse boards in strong corporate governance and, while it has stated that it will not be recommending the introduction of numerical targets for diversity characteristics (beyond gender), it has stated 'a board that comprises diversity of thought, experience and perspective can meaningfully help strength the quality of board deliberation and decision making'. Given these comments, we are not expecting new recommendations that companies set and report against diversity targets. We consider that it will, rightly, be left as a matter for each board to determine the appropriate diversity of skills and experience needed to effectively oversee the risks and opportunities relevant to their company.

More broadly, we expect to see further increases in reporting against emerging skills, such as AI, as boards seek to ensure they have the necessary skills, and can demonstrate that they possess the capabilities needed, to oversee risks and opportunities in these rapidly evolving areas.

With the ongoing focus of stakeholders and regulators on increased transparency in board skills disclosure, we also anticipate that the trend towards graded reporting will continue across listed entities.

Reflecting on the current landscape as companies continue to evolve and expand their reporting on board skills, experience and governance practices, they should expect those disclosures to shape the standard against which board conduct is assessed. Put simply, what a company discloses to the market regarding its board and the skills of its directors—and how it says its board operates—may ultimately become the statements against which its directors are judged.

With thanks to the Allens graduates and paralegals who collected the publicly available data used in this Insight.