The Parliamentary Secretary to the Treasurer, Senator Ian Campbell, said today the Government intended to remove the rule allowing 100 shareholders of a company to call special general meetings.
Under the proposed change, a minimum of five per cent of total voting rights would be required before directors had to call a meeting.
"The current 100-member test gives disproportionate influence to minority shareholders and fails to recognise the substantial size difference between public companies," Senator Campbell said.
"The law as it stands is inequitable. It gives a power to minority members that is out of all proportion to their economic interest in the company.
"Allowing a small minority of shareholders to call an extraordinary general meeting for narrow interests can be costly and penalise the majority of shareholders.
"The proposed change would not dilute the powers of individual shareholders wishing to raise issues of genuine concern. Those issues could still be raised at annual general meetings."
Senator Campbell said the fact that 12 extraordinary meetings seeking the removal of directors had been called at the NRMA during the past two years demonstrated the need to change the law.
"In the NRMA's case, where there are about two million members, special meetings were able to be requisitioned by a mere .005 per cent of members. The cost of each of the meetings held was several million dollars.
"Commonsense says a law which allows that to happen needs to be changed. The Government believes that its proposed amendment will result in a fairer system for calling special meetings of shareholders of public companies."
Senator Campbell said economic interest should be the key prerequisite to being able to force special meetings. Australia was out of step with the rest of the world by having a rule which allowed it to be overridden.
He said the requirement in the United States and United Kingdom was 10 per cent, 5 per cent in Canada and New Zealand and between 5 and 20 per cent in Europe.
The proposed amendment to section 249D of the Company Law Review Act 1998 will be contained in the draft Corporations Legislation Amendment Bill (No.2). The draft Bill will be released for public comment before Christmas and is expected to be introduced in the first Parliamentary sitting next year.
Under the provisions of the Corporations Agreement between the Commonwealth and the States, the proposed changes require at least three votes from the States and NT.
An earlier attempt by the Government to replace the 100-member threshold with a 5 per cent voting rights provision was rejected by the Senate in June 2000.
CANBERRA
2 December 2002