Chairs of 2012 AGMs will hopefully be able to vote undirected
proxies on the remuneration report without having to get ASIC
relief or draft convoluted notices of meeting.
On 24 May the Government moved to fast-track a solution to a
problem that has dogged public company AGMs since the introduction
of the Two Strikes amendments last year. Because of a drafting
error, the amendments prohibited chairs from voting undirected
proxies on the remuneration report – which was exactly
the opposite of what the Government had intended.
The Government initially reacted to this problem by tagging an
amendment onto the end of a consumer credit Bill late last year.
However, when that Bill became bogged down in parliamentary
processes, the Government had to admit that the proxy problem might
not be rectified in time for the 2012 AGM season.
The Government attempted to short-circuit the problem by giving
the amendment its own Bill and introducing that Bill into
Parliament last Thursday.
There is no absolute certainty that the Bill will be passed in
time, but the Government clearly intends to give it its best shot.
The Minister, Mr Ripoll, said that the Government was acting
"to clarify the law in time for the end of the financial year
and upcoming AGM season."
What's the problem and what's the fix?
The Two Strikes Act last year included provisions (sections
250R(4) and (5)) which together prevent a chair from voting
undirected proxies on the remuneration report. In fact, the
Government had actually intended to allow such proxies to be voted.
(For more details, see
Danger: undirected proxy!.)
The Bill introduced last week includes a new section 250R(5). In
effect this will allow the chair to vote an undirected proxy on the
remuneration report if:
the proxy does not specify the way the proxyholder is to vote
on the remuneration report; and
the proxy expressly authorises the chair to exercise the proxy
even if the resolution is connected directly or indirectly with the
remuneration of a member of the key management personnel for the
company or, if the company is part of a consolidated entity, for
I'm about to start planning for my AGM
The fact that the Government is trying to get the amendment
passed as a matter of urgency means that there is a good chance
that it will be in place before many companies are too far advanced
in planning their AGMs.
However, until the Bill has been passed by Parliament, there is
no cast iron guarantee that the problem will be fixed.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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