Unintended consequences flow from proposal requiring companies to keep email addresses on their share registers
Senator Nick Xenophon’s proposal to amend the Corporations Act requiring companies to include members’ email address on their share register has far reaching legal consequences, Governance Institute of Australia will tell the Senate Economics Legislation Committee today.
“There are important practical and legal consequences with the proposed amendment as it is currently drafted,” says Governance Institute chief executive Mr Steven Burrell. “There are no carve outs for shareholders who have no email address or who fail to provide an email address and there are no transitional arrangements which would allow companies to gather email addresses of shareholders over time.
“Irrespective of size and sector, no listed company currently holds the email addresses of all its shareholders so if the amendment was passed all listed companies would be in default of the provisions on day one. Our members’ maintain that a large number of shareholders simply do not respond to requests to provide an email address for a variety of reasons including the simple fact that they don’t have one. This is particularly so in the case for older shareholders. We also have privacy concerns over members’ email addresses being open to inspection on a share register.
In its submission to the Senate Committee, members of Governance Institute provided details of the number of email addresses held by the ASX listed companies on a no-name basis including:
- An ASX NL company which has email addresses for 46 per cent of its shareholders.
- An ASX listed investment company with approximately 120,000 shareholders, of which a vast majority are smaller retail investors, only holds e-mail addresses for 43 per cent of those shareholders, leaving 57% where the company holds no email address details.
- An ASX top 20 company with over 570,000 members which holds email addresses for 50.4 per cent of its shareholders.
- An ASX top 20 company which currently holds email addresses for approximately 45 per cent of its shareholders.
- AMP Limited, an ASX listed company with over 770,000 members and which has a large number of retail shareholders, holds email address details for only 34 per cent of its shareholders (approximately 260,000 email addresses).
AMP has estimated the costs of collecting and processing the remaining 500,000 email addresses it does not currently hold to be a minimum of $800,000 including mail costs and printing. This is an unnecessary financial impost which would be borne by all shareholders and would not necessarily result in large numbers of email address details being provided.
Senator Xenophon’s proposal to change section 169 of the Corporations Act to require a company to include a member’s email address in addition to their name and physical address on the register would impact all companies, including public companies limited by guarantee, proprietary companies including charities and not-for profits and public companies; both listed and unlisted.
Senator Xenophon proposed the amendment following efforts by CPA member Brett Stevenson to access the member register to communicate with CPA’s 155,000 members to press for details of the governance, remuneration and strategic direction of CPA Australia. Mr Stevenson was provided with the list together with their addresses but their email addresses had been removed as CPA was not legally obliged to provide Mr Stevenson with its members’ email addresses. The Corporations Act only obliges a company’s share register to contain the members’ name, address, and date of joining.
With over 155,000 members, contacting each member by mail was prohibitively expensive; postage alone would be $155,000 plus paper and printing costs, whereas communicating to members via email would be free.
As the law currently stands, if anyone requests a copy of its register and pays the fee the company must comply. However, restrictions do apply. Charities cannot use the information to ask for donations or gather information about people’s wealth. Stockbrokers can’t use it to solicit business from shareholders and companies can’t use it to create mailing lists for advertising.
“Governance Institute has consistently campaigned for greater use of electronic communication between companies and their shareholders and are on the record as supporting technology neutrality in the distribution of meeting materials. However, we do not consider that placing shareholder email details on the company’s public share register is the method which should be adopted,” Mr Burrell concluded.
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About Governance Institute of Australia
A national membership association, advocating for a community of 40,000 governance and risk management professionals from the listed, unlisted and not-for-profit sectors. Our mission is to drive better governance in all organisations, which will in turn create a stronger, better society.