The Minister for Financial Services & Regulation, Joe Hockey, today announced a proposal to stop political activists from hi-jacking company annual meetings.
The Minister has proposed a "square root" rule where the number of members required to call a company meeting will now be the square root of the total number of members of the company, or members owning 5% of voting shares.
"The square root rule is a fair, objective and simple formula that links the required number of shareholders with the size of a companys shareholder base. Shareholder democracy is not sacrificed," the Minister said.
This proposal will replace the current regulation where only 100 members can call a company meeting.
"The current situation means that any 100 people with just a handful of shares can hold a company to ransom and impose on it any agenda it wants environmental issues, union politics, globalisation, to name a few.
"These spurious general meetings have come at considerable cost to corporate Australia and its real shareholders, often up to $1 million for some large corporates, and forced boards to deal with issues that have nothing to do with creating shareholder wealth.
"The Government wants to protect the rights of bone fide minority investors. But there must be a balance between individual shareholder rights and the ability of companies to get on with the business of making money for all its shareholders.
"We do not believe that companies should be run by shareholder referendum.
"Nor should general meetings be turned into a circus where mavericks with no interest in creating shareholder value, can throw their weight around to the detriment of the women and men who have invested their savings in these companies."