Shareholders could lose their once-a-year opportunity to mingle with the company directors, if the government’s corporate law adviser has its way and scraps annual general meetings (AGMs).
Corporations and Markets Advisory Committee (CMAC) has released a discussion paper, at the request of the federal government, on the the role of the annual shareholder meetings.
Among the CMAC’s recommendations is scrapping AGMs altogether or making them only available online, condensing annual reports by removing unnecessary clutter and regulating proxy advisers who inform investors how to vote.
Australian Shareholders Association (ASA) president Vas Kolesnikoff said that while he welcomed the removal of unnecessary information from annual reports, any move to reduce the access of small shareholders and self-funded retirees to boards and executives was dangerous.
He said while institutional investors would still have access to the company, the only way most smaller shareholders could get answers to inquiries was at the AGM.
“The AGM is clearly something that can’t be diminished,” he said.
“In terms of annual reports and financial statements, they do need tidying up.”
“We’re of the view that annual reports should be improved to include business models.”
Mr Kolesnikoff said AGMs also hold company boards and executives accountable because they were public and often reported by the media.
“Any attempt to diminish the power, or ability, of investors to publicly question a board or company executive is extremely dangerous territory,” he said.
“I can give reams of examples from my members where they have sent a letter to the board and receive some kind of lip-service response.”
Any move to hold AGMs purely online would also risk accountability, but using technology to vote was a good idea, he said.
Mr Kolesnikoff said it would be unfair to regulate proxy advisers but not advisers to companies on the remuneration of executives.
It would also be very hard to enforce, as shareholders were not compelled to take their recommendations, he said.
“Why pick on proxy advisers to be regulated? What about regulation of all advisers to boards?” Mr Kolesnikoff said.
“Why pick on consultants and advisers to shareholders? It seems it’s potentially driven by business.”
