Introduced in October 2014, the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 (Bill) seeks to, amongst other things, withdraw the ability of a 100-member voting block forcing the directors of a company to call and arrange a general meeting (100-Member Rule). As it stands, the Bill seeks to preserve the current rights of members holding 5% of the voting shares in the company (5% Rule).
In this respect, the Bill has received approval from most stakeholders including industry participants and shareholder associations. Given that companies are required to meet the costs associated with arranging a general meeting including compliance costs such as circulating material to other voting members, the removal of this requirement is seen to reduce red tape imposed on business. Industry participants argue that this will also increase efficiency and shareholder value. Ultimately, the removal of the 100-Member Rule will provide a more accurate reflection of the interests of shareholders as the decision to call a general meeting will be based purely on a minimum volume of shares as opposed to the number of individual shareholders.
Notably, the Bill does not impact on the current ability of a block of at least 100 members to place a resolution on the agenda of a general meeting after it has been called. The retention of this aspect of the Corporations Act 2001 (Cth) has been met with approval by most, as special interest groups will still be able to raise any matters of concern. Coupled with the preservation of the 5% Rule, most stakeholders believe that this aspect of the Bill strikes an appropriate balance between protecting shareholders and promoting business efficiency.
The Senate Committee has recommended for the Bill to be passed. Royal Assent to the Bill is anticipated to be given in the near future.
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