Listed companies should consider improving the timeliness and focus of their annual shareholder meetings, Chapman Tripp says.
Chapman Tripp has broadened and refreshed its governance data series to incorporate annual reports for the period to 31 March 2017, and market capitalisation and board composition at 30 June 2017, for the top 75 listed issuers by market value. New measures include the timing of publication of preliminary financial results and annual reports, and the date that annual shareholder meetings (ASM) are held.
"These figures show a notable and promising trend among larger NZX companies to publish their full annual report well within the 60-day deadline set for their preliminary results, rather than the three months allowed by NZX," says Chapman Tripp partner Roger Wallis.
"It's a good case of the regulator setting the timeframe and the market outperforming.
"But many issuers have not advanced the timetable for their ASM with the result that at the ASM shareholders are often being presented with financial information that is many months old – meaning they are looking firmly in the rear vision mirror.
"A solution would be to bring the ASM forward, or to take a forward focus at the ASM, or do both."
This year, two issuers – Tower and NZX - held their ASMs very late, NZX on the last possible day, Wallis said.
"However, these were both exceptional circumstances. Tower was engaged in an important (although ultimately delayed) corporate action and the NZX was appointing a new CEO.
"But in the normal course, it is hard to conceive of a reason for not holding the ASM as close as possible to the release of the annual report," Wallis said.
OTHER OBSERVATIONS FROM OUR ANALYSIS
We reported in our Corporate Governance in New Zealand – Trends and insights document earlier this year that we anticipated an increase in shareholder activism. This has already manifested in 2017 in several ways. Examples include:
- A further Rakon director (the founder) will stand down, after last year's successful shareholder revolt to get fresh blood on the board
- Tony Falkenstein's bid for a seat on the NZX board where, despite the board's active opposition, his candidacy was supported by more than 20 million votes (17% of those voting),
- Simplicity Kiwisaver's controversial campaign to put pressure on the NZX 50, unless they improve the diversity of their boards and their senior management within the next five years, and
- a campaign from the New Zealand Shareholders' Association to provoke the entire Fletcher Building board to put themselves forward for re-election at the Fletcher Building ASM.
Diversity and director tenure
- NZX is now reporting better quality information, replacing its one-page quarterly snapshot of gender diversity data with a half yearly 10-page report.
- Our updated data shows that the representation of women on boards among the Top 75 has risen 3% over the last six months.
- With a couple of exceptions, there is little change in average length of director tenure.
An updated Corporate Governance in New Zealand – Trends and insights report on the updated data is available here.
New Zealand Herald coverage of our observations can be viewed here.
The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.