By Matthew Cranston
Treasurer Josh Frydenberg has extended consultation and proposed a hybrid version of virtual annual meetings for public companies in a bid to ensure accountability to investors while at the same time providing flexibility to business during COVID-19 restrictions.
In May the Treasurer announced emergency measures that allowed listed companies to conduct online shareholder meetings and sign documents electronically. The measures have been extended.
In September the government announced it would consult on whether the temporary reforms to allow companies to hold virtual meetings should be made permanent. However, a number of high-profile investors pushed back including Wilson Asset Management’s Geoff Wilson, who said allowing such a change would be “undemocratic and grossly unfair to millions of Australian retail investors.”
Mr Frydenberg said he would now propose a hybrid version that would ensure both physical and virtual annual meetings were available to shareholders.
“The government is interested in the proposition of a hybrid model where physical AGMs will still be required but at the same time virtual participation will also be permitted,” Mr Frydenberg told AFR Weekend.
“Reforms to the regulation of AGMs should enhance the ability of shareholders to interact with the board, not diminish it.”
He said allowing a hybrid system would be an opportunity to leverage technology to improve AGMs and to allow a greater number of shareholders to participate in the process.
“The government looks forward to receiving feedback from all interested stakeholders before finalising any decisions in this area.”
Public consultation, which was scheduled to expire on Friday, has been extended to November 6.
Under social distancing measures, especially the ongoing challenges in Victoria, it has been difficult for shareholders to physically gather and for companies to execute documents in person.
Martin Lawrence, head of research at governance advisory firm Ownership Matters Governance Advisory Service, has also said physical AGMs should be required after the virus eases, but they could be complemented by online access.
“There should always be an opportunity for people to go in person.”
Chanticleer columnist James Thomson has also repeatedly argued that the hybrid model would be the most suitable outcome for companies and shareholders, and that removing one of the few tools small investors have to demand public transparency and accountability would have been a step backwards.
During the consultation period to date Treasury has held 1-1 meetings with 13 stakeholders representing investors, industry associations, share registries, the legal profession and the regulator.