By James Thomson


Geoff Wilson, the fund manager who helped the Coalition win government by marshalling 90,000 investors against Labor’s franking credits refund policy, will now turn this army against the federal government over its plan to make virtual annual general meetings permanent.

Mr Wilson, founder of the Wilson Asset Management empire of listed investment companies, says Treasury’s plan to make permanent the temporary allowance for virtual AGMs introduced for COVID-19 is “undemocratic and grossly unfair to millions of Australian retail investors”, including his own.

“We must stand up for our shareholders,” Mr Wilson said.

“This proposal will shift the balance of power away from retail investors. We will be making a submission and we are planning on engaging our 90,000 shareholders of our seven LICs to also make submissions, similar to the franking credit campaign we ran.”

Mr Wilson’s stance has strong support, with the Australian Council of Superannuation Investors, which represents 37 of the country’s biggest super funds, also concerned about the proposal.

Veteran investor Gary Weiss, fund manager Sandon Capital and proxy advisory firm ISS have also voiced concern.

There is also frustration with a consultation period that runs for just two weeks and ends on Friday – right in the middle of AGM season, when many investors are experiencing virtual AGMs for the first time.

Treasurer Josh Frydenberg extended the relief for virtual AGMs and electronic document signing until March 2021 back in July.

The proposal to make the changes permanent was part of Prime Minister Scott Morrison’s digital business plan, announced on September 29. Treasury started its consultations on October 19.

Questions easier to ignore online

Ian Matheson, chief executive of the Australian Investor Relations Association, said it was important to note that virtual meeting will be only be optional, with many companies likely to a hybrid model of physical and virtual meetings.

He said the practice around virtual meetings had improved markedly since their introduction in March and there was “no doubt” shareholder participation and engagement had improved through the use of virtual AGMs.

But critics say there are issues of transparency and access, particularly for small investors.

Companies can screen questions they address and control the length of the debate on resolutions. Mr Wilson said WAM’s experience with virtual AGMs in the past month has left him with concerns.

“We have already experienced having our pre-submitted questions ignored,” he said.

“In a physical GM every shareholder can ask a question. In online AGMs companies are already failing to answer shareholder questions,” Mr Wilson said.

Mr Wilson said large investors, who can get private meetings with boards, already had a huge advantage over small shareholders and virtual AGMs would further entrench that.

“Virtual AGMs tilt the balance of power to the big end of town,” he said. “Retail investors are already disadvantaged compared to institutional investors. This will be another nail in the coffin for them.”

ACSI chief executive Louise Davidson said this was the wrong time to be changing the way AGMs are held, particularly in the midst of a busy period for meetings when many companies are still learning about the technology.

“Virtual AGMs are a necessity during the pandemic but they can diminish shareholders’ ability to ask questions and hold companies to account,” she said.

“In the AGMs we have already seen this year, it is apparent that, like a Zoom birthday party, something is definitely lost in the new format.

“AGMs are a core part of shareholders’ ability to hold companies to account. Significant changes to how they are run should not occur without proper scrutiny and consultation.”

Gary Weiss, who has been on both sides of the fence, as a director being asked tough questions and an investor asking them, saysphysical meetings have been part of the corporate scene for decades.

“They provide a great opportunity for shareholders to engage directly with the board – something that is not really possible to capture through virtual meetings,” Mr Weiss said.

“It’s a bit like conducting sessions of parliaments virtually. Something would undoubtedly be missed.”

Sandon Capital managing director Gabriel Radzyminski said physical AGMs were a key way for investors to ask questions of directors and, where necessary, put pressure on them.

“The mere fact of having to face shareholders in person is a significant accountability tool,” he said.

“The only ones that will benefit from this are shoddy companies. Good companies won’t mind being grilled by their shareholders – it’s the shoddy companies that will.”

Mr Wilson agreed, saying: “Accountability goes out the window from a governance perspective. Companies are free to disallow votes without challenge, push through contentious resolutions without challenge or explanation.

“It gives boards the power to do what they want and leaves shareholders hung out to dry.”