Shareholders fight ‘20-member rule’

By Michael Bailey

THE Australian Shareholders’ Association (ASA) is fighting the Government’s proposed watering down of the ‘100-member rule’ for placing a resolution on the agenda of a company’s annual general meeting.

Parliamentary Secretary to the Treasurer Chris Pearce has proposed the number of shareholder signatures required to place an agenda item be reduced from 100 to 20.

Chief executive of the ASA Stuart Wilson has described this change as a “sweetener” for Pearce’s other proposal, which will raise the power required to call an extraordinary general meeting up from 100 shareholder signatures to a block representing at least 5 per cent of the company’s market capitalisation.

While the ASA supports the latter proposal, Wilson said a ‘20-member rule’ would “risk opening up annual general meetings to frivolous or extraneous issues, which will only lessen the already-criticised effectiveness of these meetings”.

The ASA is calling for the ‘100-member rule’ to be retained and toughened by requiring each signatory supporting an agenda item to have a ‘marketable’ parcel of shares, defined by the Australian Stock Exchange as worth at least $500.

ASA chair John Curry said he was suspicious of Government motives for the ‘20-member rule’ proposal.

“If the legislation is passed and AGMs become overwhelmed with special interest agenda items, it could force a change where you need 5 per cent to get those up too. The Government could be being Machiavellian here,” Curry said.

Investment and Financial Services Association (IFSA) chief executive Richard Gilbert welcomed ASA’s support for the 5 per cent requirement on calling an extraordinary meeting.