ICC Australia urges review of shareholder legislation
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| Australian laws on the calling of EGMs are out of synch with other countries |
Melbourne, Australia, 18 July 2002 - ICC Australia is urging the Australian government to make legislation fairer regarding the rights of shareholders to call extraordinary general meetings.
The present law in Australia allows a group of 100 shareholders to call for a meeting - a number easily attained within companies with a large number of shareholders.
With no limit to the number of EGMs that can be called, companies are vulnerable to guerrilla warfare from small groups such as unionists, environmentalists and anti-globalists. ICC Australia believes the potential disruption to management, and cost to companies is huge.
Bart Oude-Vrielink, a Partner at Minter Ellison and Chairman of ICC Australia Corporate Law Committee says the law needs to be changed so that "the means of calling an EGM reflect the voting power in the meeting itself, which is based fundamentally on shares held in the company, not on numbers of shareholders attending".
According to Martin Cox, ICC Chief Executive, the current law risks discouraging foreign companies from investing in Australia.
"Australia appears to be the only country in the world where such a small number of shareholders can call a general meeting", he said. "It is manifestly absurd".
Following discussions with the government and opposition parties he said he is confident it will be possible to draft a bill that preserves the rights of minor shareholders to exercise a voice, "while protecting companies from frivolous or malicious abuse of those rights".
In order to avoid unnecessary general meetings, Douglas Gration, Company Secretary at Telstra, suggests the creation of a mechanism for determining whether a matter need be dealt with at an EGM, at considerable cost to the company, or whether it can be raised at the scheduled AGM.
He said: "Perhaps there is a role for a regulator, such as the Australian Securities and Investments Commission, to make a ruling on EGM requisitions".
Mr Cox said the Australian law on the calling of EGMs was out of synch with most other countries.
"In almost every comparable jurisdiction the requirement for demanding an EGM is 10% of paid up capital, or 10% of total voting rights," he said. "For the record, ICC is currently campaigning in Russia for the strengthening of minority shareholder rights. Shareholders in Australia can command a general meeting without any reference to the proportion of the company they own, or the percentage of the voting rights they control."
He added that whatever law the government drafted, it needed to ensure an adequate mechanism was in place for urgent crises to be brought to the attention of a company's shareholders, and for the shareholders to settle the matter by holding a discussion and taking a vote.
"And of course it is vitally important that we preserve the right of minority shareholders to bring resolutions before AGMs," he said.