Shareholder rules not fixed

A COMPANIES and Securities Advisory Committee review of the calling of shareholder meetings of public listed companies has not yet settled on a firm position.

At a recent Australian Institute of Company Directors seminar to discuss the practicalities of the Corporations Law Economic Reform Program, CSAC executive director John Kluver said any discussion of shareholder meetings raised basic questions about the proper scope of shareholder involvement in corporate decision-making.

“Much of this debate turns on how best to resolve the tension in corporate governance between, on the one hand, giving the board of directors the flexibility and powers to effectively manage the company and, on the other hand, encouraging or enhancing shareholder interest and involvement,” Mr Kluver said.

“Another tension is between the potentially conflicting interests of shareholders – in particular, what power should a small group of members have to use the medium of meetings to express their views, either by calling general meetings or placing matters on the agenda of those meetings?”

In addition to shareholders holding 5 per cent of issued share capital, 100 shareholders may requisition a general meeting, regardless of the value of their shareholding.

This test permits shareholders who, together, may hold only a minuscule proportion of a company’s issued shares to call extraordinary general meetings.

“Only in Australia is such a far-reaching right given to such a small number of shareholders,” Mr Kluver said.

He said the discussion paper proposed Corporations Law be amended so, in addition to the obligation to hold an annual

general meeting, only shareholders who collectively had a certain percentage of a listed company’s issued voting share capital may call any other meeting of shareholders.

“Some respondents considered the 100 shareholder test, or some increased numerical test, should be retained, arguing the test is intrinsically appealing when considered in light of the policy to encourage widespread share ownership among the Australian community,” Mr Kluver said.

“Most respondents favoured only a 5 per cent of voting share capital test for calling a general meeting.”

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