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Labor Members’ and Senators’ Minority Report
Chapter 2: Proportional
Voting for Directors
Conclusions:
Labor Members and Senators
believe that the current method of election of company directors may be open to
unfair manipulation. We believe that a range of options of election methods
should be available to companies. These options should be prepared in
consultation with the ASX and ASIC.
A companyIndividual companies should can then
nominate which election methodis its
preferred model they prefer.
Recommendations:
Labor Members and Senators
support the Committee recommendations.
Chapter 3: Environmental
Reporting
Conclusions:
Labor Members and Senators
welcome the debate surrounding this measure. Despite the predictions in many
of the submissions that the clause was unworkable, industry and regulators, in
consultation with stakeholders, have been able to reach a degree of consensus
on compliance with this measure.
Recommendations:
Labor Members and Senators
support the retention of section s.299(1)(f) of the Corporations Law.
Chapter 4: Disclosure
of Information Filed Overseas
Conclusions:
Labor Members and Senators
believe that there are many benefits to investors if this provision is
retained. The most compelling view expressed was of the benefits of
globalisation and harmonisation with international markets. The ASX will face increased competition in the
Australian market from overseas competitors in the near future. Inevitably
alliances will be formed with overseas exchanges, which will lead to standard
documentation in all markets.
Recommendations:
Labor Members and Senators
support the retention of section s.323 DA of the Corporations Law.
Chapter 5: Reporting
of Proceedings
Conclusions:
Labor Members and Senators
believe that the arguments concerning
put forward on transparency, corporate
governance, protection of shareholders interests and the harmonisation of
international standards were compelling.
Recommendation:
Labor Members and Senators
support the principle that companies should be obliged to report any
significant proceedings instituted against the company for any material breach
by the company of the Corporations Law or trade practices law. We therefore do
not support the Committee’s recommendation.
Chapter 7: Notice
of Meetings
Conclusions:
Labor Members and Senators
believe that adequate time is necessary to allow effective participation by
shareholders. As Australia’s market has matured, it is estimated that 60% of
Australian equities are owned or managed by institutional investors. This
changing structure has seen the investor community require a longer period to
appropriately consider the information provided by management to shareholders.
While acknowledging the transitional difficulties experienced last year by many
companies following the amendments to the Company Law Review Act, the benefits
in encouraging participation of shareholders or their representatives are
substantial.
Recommendation:
Labor Members and Senators
support the retention of 28 days notice.
Chapter 8: Disclosure
of Proxy Voting
Conclusion:
One of the most disappointing
features of our corporate culture is the low level of participation by
institutional investors. This measure is a wake-up call to encourage greater
participation in corporate affairs. The current low level of proxy voting –
averaging only 32% - is of concern.
Recommendation:
Labor Members and Senators
support the retention of
- section 251 AA (1) (a)
- section 250 J (1A)
- section 251 AA (1) (b) (iii)
- support the amendment to correct
drafting oversight, and;
- support the final recommendation.
Chapter 9: Corporate
Governance Board
Conclusion:
Labor Members and Senators
believe that good corporate governance increases shareholder value.
International studies show a clear link between corporate governance and
increased shareholder value.
Overseas experience
demonstrates that there are many modles models of corporate governance. An
examination of the most appropriate model for Australia is essential before Labor
Members and Senators could support mandating such a measure.
While
Australia has comparatively good corporate governance practices, significant
improvement is required.
However,
compliance withUptake of
the IFSA Blue Book guidelines on corporate governance is disappointingly low, despite many years to adopt
these measuresdisappointingly low, despite many years to adopt the
measures. We believe that the Committee should monitor levels
of compliance with corporate governance principles and if a significant
increase in the levels of voluntary compliance is not achieved over the next
two years, it may be We believe that the Committee should monitor
levels of compliance with corporate governance principles, and if a significant
increase in the levels of voluntary compliance is not achieved over the next
two years, it may be necessary to revisit this issue.
Recommendation:
Labor Members and Senators
support the Committee’s recommendations.
Chapter 10: Audit
Committee
Conclusions:
Labor Members and Senators
believe that audit committees provide an integral element of good corporate
governance. Many listed companies have opted for such measures.
We believe that the Committee
should monitor the levels of compliance with this principle and if significant
increase in the levels of voluntary compliance is not achieved over the next
two years, it may be necessary to revisit this issue.
Recommendation:
Labor Members and Senators
support the Committee’s recommendations.
Chapter 11: Obligation
to Report Suspicions of Fraud
Conclusions:
Labor Members and Senators
believe that this increased level of transparency within a corporation would
enhance the role of an auditor and an audit committee. This would reduce the likelyhood likelihood
that theof
mistakes and excesses of the 1980s were being repeated.
Recommendation:
Labor Members and Senators
support the principle that directors and executive officers of a company should be obliged to report any
reasonable suspicion of serious fraud or improper conduct to the auditor.
Chapter 12: Director’s
Power to call a Meeting
Conclusion:
Labor Members and Senators
believe that this is an important element of good corporate governance practices. It provides a balance to a
majority position on a board without necessarily factionalising a board. We
believe that it is unsatisfactory that the only option available to dissenting
directors is to resign from a board.
This may lead to a
contentious issue not being brought to the attention of shareholders.
No compelling evidence was
provided to the Committee of this process being abused.
Recommendation:
Labor Members and Senators
support the retention of section 249 CA of the Corporations Law.
Chapter 13: Receipt
of Proxy Appointments
Recommendation:
Labor Members and Senators
welcome the belated support for section 250 BA of the Corporations Law by
Government Members of the Committee and support the Committee’s
recommendations.
Chapter 14: Director’s
Remuneration
Conclusions:
Labor Members and Senators
welcomed the overwhelming support this measure received, both from those who
made formal submissions and members of the wider community.
We support the review of this
issue by the Australian Accounting Standards Board (AASB) and look forward to
the release of their draft standard.
We believe that it is hasty
for the Parliament to revisit this matter while this issue is pending
determination by the AASB.
Labor Members and Senators
believe that this issue should be re-assessed by the committee after the release
of the proposed standard.
Recommendation:
Labor Members and Senators
support the retention of section 300A of the Corporations Law pending the
release of the AASB’s draft standard.
Chapter 15: Requisitioning
a General Meeting
Conclusion:
Labor Members and Senators
believe that there have been significantare unintended consequences due arising from the changes made by
the Company Law Review Act 1998.
The changes
have cause significant extra costs to be borne by
an overwhelming majority of shareholdersmean that
companies and the majority of shareholders bear significant costs when
an extraordinary general meeting is
requisitioned.
Labor believes that this
issue should be revisited by Parliament with a view to restoring the balance
between a the majority
of shareholders and an an active minority. Labor is actively
canvassing options with interested parties and will release its position by the
end of November.
Recommendation:
Labor Members and Senators
recognise the need for change to restore an appropriate balance between
promoting company efficiency and maintaining corporate governance concerns of
minority shareholders. We do not support, however, the Committee’s proposed
amendment. This issue needs to be looked at further in the near future.
Chapter 16: Other
Matters
Recommendation:
Labor Members and Senators
support the conclusions of the Committee.
Senator Stephen Conroy Mr
Bob Sercombe MP
Mr Kevin Rudd MP Senator
Barney Cooney
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