Top governance professionals renew call for AGM overhaul
White paper 'Does the AGM need to become an eAGM?' released
There is a need for the annual general meeting (AGM) to be modernised to adapt for the digital age, improve its effectiveness as a communication and decision-making forum for shareholders and reduce avoidable costs for companies, say some of Australia's leading governance professionals.
A joint LexisNexis / Governance Institute of Australia white paper, 'Does the AGM need to become an eAGM?', confirms that leading company secretaries strongly support amending the Corporations Act 2001 (Cth) to permit companies to deliver meeting materials to shareholders electronically, and permit electronic voting on company resolutions.
The white paper also found that company secretaries favour changing legislation to clarify companies' ability to implement direct voting, which is generally considered a more representative and 'democratic' form of decision-making. While companies can currently implement direct voting voluntarily by changing their constitutions, to date fewer than 20 companies have done so.
"Given that direct voting greatly enhances voting integrity, governance professionals believe an explicit legislative provision could be the jolt needed to boost take-up. Allowing shareholders to vote directly, particularly online, is one of the foundations for modernising the AGM and should be actively encouraged by the Corporations Act. It means all shareholders can have their say on resolutions — regardless of whether or not they physically attend the AGM", says Governance Institute's Chief Executive Officer Steve Burrell.
LexisNexis Australia's Managing Director, Joanne Beckett, observed that the white paper confirms challenges faced by the governance community amid a climate of plunging attendance rates at the AGM. The white paper also indicates that governance professionals today need an added range of technical skills to meet the current commercial challenges surrounding AGMs.
"Not only do they need to be familiar with the technical requirements of holding a compliant AGM, they also need to keep up to date on key technological innovations — whether that be webcasting platforms, voting apps or other electronic devices — that tap into stakeholder needs, in order to develop a genuinely engaging and effective AGM", said Ms Beckett.
Differing views were expressed on whether a fundamental re-structure of the AGM is necessary to boost shareholder interest and participation. However, it was observed that the current legal framework is flexible enough to allow companies to choose a model that best suits them and their shareholders' needs, including splitting the AGM into separate meetings — one dedicated to voting and the other to a retail shareholder briefing.
"Nevertheless, the changes to permit electronic delivery of meeting material and direct voting are a necessary first step to bring the corporations law in line with modern technology and communication practices, and will enhance outcomes for both companies and shareholders", Mr Burrell concluded.
'Does the AGM need to become an eAGM?' reflects the views of eight senior company secretaries and governance professionals of Australia's top ASX-listed companies conveyed at a roundtable discussion held in March 2016. To download it, please go here.
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