Following the 2011 AGM season, AGMs are seen as becoming more
complex and less relevant to shareholders as a platform for
engagement with company directors.
There was no evidence of better attendance at this year's
AGMs despite hopes that the new executive remuneration rules would
revive interaction between companies and their shareholders.
In an attempt to boost shareholder participation, the
Parliamentary Secretary has referred AGMs to the Corporations and
Markets Advisory Committee (CAMAC). The CAMAC review will explore
how the AGM may operate in the future and how new technology could
be used to counter the challenges posed by foreign ownership and
the dual-listing of companies.
The review follows the introduction of the "two
strikes" test and "no vacancy rule" in July this
year. Read our eAlert! on this ruling
Middletons has surveyed the top 50 ASX-listed companies (ASX 50)
and a sample of Middletons' ASX-listed clients to see how the
new executive remuneration rules were applied in practice in the
2011 AGM season.
Key findings of the Middletons survey
Of the companies holding AGMs after July 2011, two of the ASX
50 and three of the Middletons clients surveyed received their
first "strike" in 2011. Of those companies, the average
vote in favour of the remuneration report was 59.3%. The relatively
low level of disapproval may have implications for any
"spill" resolution following a possible second
Only 53% of the companies surveyed disclosed the two strike
rule in the explanatory memorandum accompanying the notice of AGM.
But almost all (95%) included a voting exclusion in the explanatory
memorandum with regards to key management personnel.
The survey also revealed a divergence in market practice
regarding proxy forms. A significant number of companies (44% of
the ASX 50) opted to streamline the proxy form by including only
one "tick box" to both appoint the Chairperson as proxy
and authorise the Chairperson to vote undirected proxies in favour
of the remuneration report.
The ASX 50 overwhelmingly (87%) conducted the vote on the
remuneration report by poll.
Where to from here
With several companies facing their second strike in 2012, focus
is shifting to how those companies will prepare for the possibility
of their directors facing a spill.
Further, amendment to the Corporations Act is expected
to settle uncertainty over the issues raised by the new rules, such
as whether the Chairperson can vote open proxies on the
However, unless the CAMAC inquiry produces fresh ideas, a
tweaking of the new rules may do little to revive shareholder
participation in AGMs. The discussion paper and dates for
submissions on the CAMAC inquiry have not yet been published. If
you are considering making a submission on the future of the AGM,
we can assist you.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).