100-member rule bill passed in Senate
The bill repealing the ‘100-member rule’ to call a general meeting — the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 — has been passed in the Senate, following a recommendation in favour by the Senate Economics Legislation Committee.
After almost a decade of advocacy on the part of Governance Institute — which first brought the issue to the attention of the government and the business community — the repeal of the 100-member rule looks likely, as it returns now to the House of Representatives.
The ‘100-member rule’ is open to abuse by special interest groups who threaten to call a general meeting between AGMs unless the company negotiates on marginal issues that do not have majority shareholder support. This is a vexatious practice, as it can cost a large listed company many millions of dollars to hold an EGM — a cost to shareholders who do not support the issue of the special interest group. For example, Woolworths was forced to hold a general meeting to consider a resolution on $1 limits on poker machines. The meeting cost $500,000 to run but the resolution only received support from 2.5 per cent of shareholders.
The bill still allows for groups with five per cent of the votes that can be cast to requisition a general meeting — ensuring that there is a level of shareholder support before other shareholders are put to the cost of a meeting.
Importantly, it also preserves the right of 100 members to put issues on the agenda of the annual general meeting (AGM) which is a central plank in a corporate governance framework.