The Parliamentary Secretary to the Treasurer, the Hon Chris Pearce MP, today released a package of draft legislation that would make it easier for shareholders to participate in corporate governance processes whilst striking a more appropriate balance between the rights of different groups of shareholders.
The legislation would remove the so called ‘100 member rule’, which currently requires companies to hold special general meetings at the request of only 100 shareholders. A minimum of 5 per cent of total voting shares would be required to requisition a special general meeting.
Mr Pearce said the 100 member rule has been criticised by many, including the judiciary on the following grounds:
- it confers disproportionate influence on very small groups of shareholders by enabling them to require companies to hold special meetings on particular issues;
- it fails to recognise substantial differences in the size of companies; and
- it is our of step with comparative laws in other countries.
To further benefit shareholders, a number of new proposals have been developed to enhance their capacity to participate in scheduled meetings. These proposals include making it easier for minority shareholders to place resolutions on the agenda of scheduled company meetings and to require companies to distribute members’ statements along with notices of meetings. There will also be greater scope for resolutions and statements to be distributed electronically to members.
Finally, the reforms will require proxy holders to vote in accordance with shareholder instructions. This will improve shareholder confidence in proxy voting by preventing the questionable practice of ‘cherry picking’ proxies, whereby proxy holders lodge votes that accord with their own views while withholding contrary votes.
The draft legislation will be contained in the proposed Corporations Amendment Bill (No. 2) 2005. It is available on the Treasury website, www.treasury.gov.au. Submissions on the draft Bill will be accepted until 1 April 2005.
MELBOURNE
7 February 2005
Contact: Bernie Finn 03 9887 3890 or 0419 140 405