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Shareholding Practices of Non-Executive Directors in ASX Listed Companies

Non-Executive Director Shareholding – Legal Obligations and Governance Guidelines

There are no minimum shareholding requirements for non-executive directors under the Corporations Act 2001. But the Act does require that a director of a public company should have the skills, knowledge and experience needed to discharge their duties as a director.

Corporate Governance Principles and Recommendations (CGPR) 2019 recommends that disclosures pertaining to non-executive director remuneration should contain a gist of the company’s policies and practices regarding minimum shareholding requirements, if any.

Advantages of Equity Ownership by Non-Executive Directors

Non-executive directors who have an equity interest in the company's performance are more likely to make decisions that enhance long-term shareholder returns. CGPR 2019 states that having “skin in the game” aligns their interests with those of the shareholders.

Minimum Shareholding Policy

A company is not obligated to prescribe minimum shareholding requirements for its non-executive directors. Where the board of directors of a company decide to do so as a good governance practice, it usually formulates and adopts a minimum shareholding policy. The policy is company-specific and therefore not uniform across ASX listed companies.

A minimum shareholding policy sets out the requirements for directors to acquire a specified minimum shareholding in the company within a prescribed period. It also outlines the various means by which these requirements can be met.


Minimum Shareholding Practices in ASX Listed Companies

In our 2023 Governance Impressions Report, we looked at the minimum shareholding requirements for non-executive directors at Top 100 ASX listed companies based on market capitalisation.

Minimum shareholding requirement was typically equivalent to one year's worth of base fees. The remaining 24% of companies did not mandate non-executive directors to own shares in the company, though some did encourage them to do so.

Disclosure Practices

Typically, the disclosure regarding non-executive directors' shareholdings is included in the remuneration report section of the annual report. In certain cases, companies have opted to disclose their minimum shareholding policy in the corporate governance statement and the website of the company.


As minimum shareholding requirements are not mandatory, companies who have adopted a minimum shareholding policy seek to fulfill this objective through by specifying timeframes within which the directors have to comply with the requirements. As a result, the timeframes also vary from company to company.

Some companies did not specify a specific timeframe for compliance, while others set a general timeframe such as “reasonable period” for the non-executive directors to comply. However, a common timeframe was between 3 to 5 years for the non-executive directors to meet the minimum shareholding requirements.

In essence, non-executive directors aren't obligated to hold company shares, yet having an equity stake is regarded as beneficial. This is evident from the fact that approximately 76% of ASX Top 100 companies, determined by market capitalisation, have instituted shareholding prerequisites for their non-executive directors.


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