Shareholders caught in political shenanigans

Posted by on 26/07/2006

A coalition of key business and shareholders groups has lambasted five State Governments for hijacking reforms to the 100 member rule, claiming the States’ behaviour is an appalling waste of taxpayers’ money and a willful attempt to turn shareholders into political pawns.

The coalition has written to the Attorneys-General of New South Wales, Victoria, Western Australia, Tasmania, and Queensland, asking them not to reject a proposal that has the support of both the Federal Government and Opposition, business groups and retail shareholders. The coalition is comprised of Chartered Secretaries Australia (CSA), Australian Institute of Company Directors (AICD), Australasian Investor Relations Association (AIRA), Business Council of Australia (BCA), Investment & Financial Services Association (IFSA), Australian Employee Ownership Association (AEOA) and Financial Services Institute of Australasia (FINSIA).

“This is not the time or place for a political stoush; this reform is about protecting the majority of shareholders from the mischief of a few. It begins and ends there,” the business coalition spokesperson, Mr Tim Sheehy, said.

The coalition is deeply disappointed at the waste of time and taxpayers’ money involved in further discussion on an issue that has already gone through two rounds of public consultation, including a Parliamentary Joint Committee on Corporations and Financial Services inquiry.

“The Joint Committee’s report recognised its merits and clarified that there was bipartisan support for the reform. Anything more is just an insult to democratic process,” Mr Sheehy said.

The states are challenging a proposal contained in the Corporations Amendment Bill (No 2) 2006 to scrap the rule allowing just 100 shareholders to call an Extraordinary General Meeting (EGM).

“The removal of the 100 member rule is based on its potential for mischief, and the experience of companies – and their shareholders - being held liable for millions of dollars in meeting costs due to single issue lobby groups.

“It’s taken a long time to address this anomalous rule and bring it in line with overseas practice. For the states to intervene at this crucial stage, after six years of consultation, is nothing short of irresponsible political wrangling,” Mr Sheehy said.

“Scrapping the 100 member rule will not disempower investors, because the reform Bill still allows for groups with a five per cent of total voting shares to requisition an EGM, and for 100 members to add a resolution to the agenda of an annual general meeting. This all provides a simple, workable solution and a reasonable balance of the rights of shareholders with the importance of allowing directors to effectively run the company,” Mr Sheehy said.

For further information please contact Mr Tim Sheehy on (02) 9223 5744 or 0419 490 594 or Viv Hardy on (02) 9818 9310.

MR/2006/12

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