The Morrison Government has used the veil of the pandemic to try to increase corporate power and decrease protections for investors and consumers at every available opportunity.
They did it when they watered-down continuous disclosure obligations. They're trying to do it with legislation to fix prices for litigation funding and to abolish responsible lending obligations. They've even proposed stopping investors from being able to get advice on company performance.
For this government, 'can-do capitalism' has nothing to do with complete information or perfect competition. This government exists to do the bidding of its corporate masters and donors.
This bill is the latest attempt to capitalise on COVID-19 for the sake of the rich and the powerful. It does so by following the playbook of seeking to make permanent a temporary measure introduced since the pandemic hit. Specifically, this bill seeks to make permanent the temporary dispensation granted to companies from having to hold in-person annual general meetings (AGMs).
The Greens accepted that this measure was necessary during the period of extended lockdowns. And the Greens support making permanent the capacity for companies to hold 'hybrid AGMs', being a combination of both an in‑person and virtual meeting. However, we do not support the provisions in this bill that would allow companies through an amendment to their constitution to hold wholly virtual AGMs.
It is a statement of fact that the limited liability corporation and the protection that it provides for shareholders is fundamental to modern capitalism. The insulation provided by limited liability has resulted in corporate power growing to the point where it has overwhelmed our democracy and is putting at risk the capacity of the earth's ecosystem to support human life.
AGMs are one of the few mechanisms by which corporations are required to account for themselves publicly. Ostensibly, AGMs are an opportunity for investors to scrutinise what is being done with their money. But AGMs serve a broader and legitimate public purpose. Just once a year, those who have the power to direct capital and shape economies, societies and lives, have to sit down in front of ordinary people, look them in the eye and answer questions.
It is this humbling of the executive class that this bill is seeking to avoid. The pursuit of profit at all costs relies on those that run corporations being able to abstract themselves from any destruction that they are wreaking on people or the planet. For CEOs and Chairpersons, the prospect of being personally confronted with the human or ecological cost of their actions, or simply being quizzed as to whether they really deserve their obscenely large bonuses, can be just a little uncouth.
Which is exactly why companies—and listed companies in particular—should continue to hold in-person AGMs, either as a standalone meeting, or as a hybrid-virtual meeting. Given all of the power and wealth concentrated in their hands, the least that the captains of industry and finance should be expected to do is face the music once a year.
Virtual AGMs do hold the prospect of offering greater accessibility for a greater number of shareholders. But the technology that would allow for wholly virtual AGMs to provide the same level of scrutiny as an in-person meeting is not yet widely accessible. And the governance practices required to ensure that wholly virtual AGMs are conducted with the same level of probity are not yet in place.
A number of submissions detailed technological and governance issues that arose from hybrid AGMs conducted during the period of temporary dispensation from having to hold in-person meetings. The Australasian Centre for Corporate Responsibility's (ACCR) submission provided a summary of such issues that they have witnessed over the last eighteen months, including:
only accepting questions submitted online;
questions not displayed to shareholders;
companies ignored or aggregated questions;
proponents were not permitted to address the shareholder resolutions; and
voting results were not published during the meeting.
The Australian Council of Superannuation Investors (ACSI) pointed out the inadequacy of requiring a constitutional amendment as a means of ensuring active shareholder agreement to allow wholly virtual meetings. ACSI advised that to give effect to the temporary dispensation from being required to hold an in-person AGMs, company constitutions might already have been amended to allow for wholly virtual AGMs, and without shareholders actively agreeing to this amendment having a permanent effect.
Initial public offerings (IPOs) will be able to, from establishment, allow for wholly virtual AGMs in their constitution, creating a transition to wholly virtual meetings by default.
This bill does not address any of these issues. Yet it has made the leap from allowing hybrid AGMs temporarily, to allowing wholly virtual AGMs permanently. This a naked ploy to give corporate Australia a chance to recalibrate expectations about accountability and transparency.
Allowing hybrid AGMs should be the limit of current reform in respect of company meetings. This will provide an opportunity for all of the issues associated with virtual meetings to be sorted out and for there to be real-world confirmation of the purported benefits. But until then, wholly virtual AGMs should not be allowed, and shareholders should retain the opportunity to sit in the same room as the executive and the board to bear witness to exactly what they are up to.
Recommendation
That provisions allowing for entities to conduct wholly virtual AGMs be opposed.
Senator Nick McKim
Participating Member
Australian Greens Senator for Tasmania