Digital shareholder communications must embrace email and web
Any amendments to the Corporations Act to enhance shareholder engagement digitally must include email and web access, Governance Institute of Australia said today, claiming their exclusion will restrict communication and do not reflect the way Australians engage with digital technologies and content.
In a submission on Technology neutrality in distributing company meeting notices and materials, Governance Institute said that without email and web access, the flexible framework that the government is proposing will enable organisations to individually determine how they communicate with shareholders and deliver meeting materials. This will make it overly complicated and likely to disenfranchise shareholders, who will have no certainty as to how the law operates. If email and internet access are recognised as legitimate forms of digital communication, it will overcome the inherent complexities in the proposals and pave the way for streamlined and simplified reforms.
Underpinning Governance Institute’s concerns with the proposals is that the reforms clarify that only a universal or near-universal channel of communication can be utilised, and then specify that this is limited to mail delivery or text messaging on mobile phones.
“The reality today is that most Australians access email via their mobile phone or mobile devices, yet the government’s technology neutral proposals — which recognise mobile phones as a near-universal channel of communication — do not recognise email or web access as a near-universal channel of communication. This is because less than 90 per cent of Australians have access to the internet at home. It really is nonsensical to suggest that Australians only access email via a computer at home,” Governance Institute chief executive Steve Burrell said.
“More to the point, shareholders are not required to provide their mobile phone numbers to the companies in which they invest. In fact, companies in general hold the mobile phone numbers of less than one per cent of their shareholder base, and shareholders are not required to provide their mobile phone numbers, making text messaging a fiction. Research shows that 80 per cent of shareholders want to receive communications by email,” he added.
Governance Institute pointed out that shareholder participation is a key component of a successful annual general meeting (AGM), yet attendance continues to decline at an alarming rate. Research by Computershare of the companies which use it as the registry provider shows that only 0.158 per cent of shareholders attended AGMs in 2015, down 25 per cent over 10 years. Despite this, the cost of holding of an AGM has sky-rocketed and range from $250,000—$1,000,000 for ASX200 companies.
“Moving the notice of meeting and meeting materials into the digital world is hopefully a first step to a technology-neutral corporations law generally and a simplified regulatory framework that accommodates evolving technologies for shareholder engagement,” Mr Burrell commented. “Australia is the world's sixth largest country and shareholders are dispersed geographically, both nationally and internationally, making email and web access with the companies in which they invest absolutely essential. It should not be difficult to recognise this and not complicate the reforms so much that they become ineffective,” Mr Burrell said.
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