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Shareholder rights come under review

PEOPLE pushing their own agenda by purchasing shares, be it environmental or other issues, will be targeted if new reforms currently under discussion are implemented by government.

The Companies and Securities Advisory Committee, established to advise the Federal Government on reform of corporate law, has released a discussion paper on Shareholder Participation in the Modern Listed Public Company.

Central to the paper is the issue

of whether 100 shareholders should be entitled to requisition a general meeting.

As the law now stands, 100 shareholders (as well as shareholders holding 5 per cent of issued capital) may request a general meeting, regardless of the value of their shareholding.

This permits interest groups who may own only a minuscule proportion of a company’s issued shares to put that company through the considerable expense and time of calling extraordinary general meetings.

Australia stands alone in providing such far-reaching rights to minor shareholders.

In releasing the discussion paper, the convenor of the Advisory Committee, Richard St John said: “Effective shareholder participation is a fundamental aspect of good corporate governance.

“Shareholders influence the affairs of their company by electing directors and voting on those matters that require their consent.”

The advisory committee proposes that 100 shareholders no longer be able to request a meeting.

“Only shareholders who together represent a minimum proportion of the company’s issued share capital should be entitled to requisition extraordinary general meetings.

The advisory committee is undecided on whether this minimum should be 5 per cent or some other figure.

Other concerns addressed in the paper include whether shareholders should be entitled to cast electronic or postal votes, whether there should be greater legislative regulation of the powers and duties of the chair of a meeting and whether companies could conduct ballots without holding an extraordinary general meeting.

“The discussion paper outlines possible ways to streamline shareholder participation, including the use of electronic technology to assist the large number of shareholders who cannot attend meetings to vote,” Mr St John said.

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