23/10/2007 - 10:21

AGMs too cumbersome for minnows: Chartered Secretaries

23/10/2007 - 10:21

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Annual General Meetings are disenfranchising shareholders in small listed companies, according to peak body Chartered Secretaries Australia, which has called for wide-ranging discussion on the issue.

AGMs too cumbersome for minnows: Chartered Secretaries

Annual General Meetings are disenfranchising shareholders in small listed companies, according to peak body Chartered Secretaries Australia, which has called for wide-ranging discussion on the issue.

 

 

The full text of a company announcement is pasted below

Australia's peak body for governance professionals believes that there is no compelling case for small listed companies to be required to hold an Annual General Meeting (AGM) and has called for wide-ranging discussion on the issue.

In its submission to the Parliamentary Joint Committee on Corporations and Financial Services' Inquiry into Shareholder Engagement and Participation, Chartered Secretaries Australia (CSA) suggests that, while the ASX Top 300 companies should be obliged to hold a physical AGM, small listed companies should not be required to, unless of course they choose to, or one is requested by members holding at least five per cent of the voting power.  

According to CSA's Chief Executive, Mr Tim Sheehy, there are problems with the current AGM format that are disenfranchising shareholders and that need to be addressed.  

"For example, AGMs are often held at times and locations that can't accommodate geographically dispersed shareholders. And with continuous disclosure regulation, 'real-time' company news is readily available on the web and through the media such that there is often nothing new for companies to announce at the AGM and therefore little incentive on the part of shareholders to attend," said Mr Sheehy.  

"This is a problem for all companies but small companies are harder hit simply because they do not have the same critical mass of shareholders as larger ones. Many small companies are strongly questioning the value of holding a costly AGM when barely a handful of shareholders ever turn up".  

CSA's proposal aims to spare small company shareholders the expense of holding regular AGMs without denying them the important opportunity to participate in company affairs where there are significant decisions to be made or where there is sufficient shareholder demand for a meeting.  

"Under our proposed formula, a physical AGM would not be mandatory where the resolutions concerned less critical issues including the tabling of accounts which are already five months old by the time the AGM comes round," said Mr Sheehy.  

"In these instances, shareholders would be invited to vote directly online or by post, with all background information sent out with the voting form.  

"However, for potential conflict-of-interest issues, such as director remuneration, CSA would support a mandatory AGM."  

"With the AGM in its traditional form rapidly losing the support of shareholders and the corporate community in general, shareholders in small companies should not be expected to bear the cost burden of an increasingly anachronistic institution. After all it is the shareholder, not the company, paying for the privilege," added Mr Sheehy.

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