Industrial Manslaughter; Australia as a branch economy?; Asia’s loss is Australia’s; ASX disclosure change; No common board practices; Demerger relief; Globalisation not just an Aussie swearword; Mergers and Acqusitions; Employee share ownership; BP under siege; From watchdog to peeping tom; Global economic downturn; Bronwyn Bishop and aging directors; The best of times and the worst of times.
AICD has made a submission to the Victorian Government asking that its Crimes (Industrial Manslaughter) Bill be referred to it's Law Reform Committee or to the Victorian Law Reform Commission for detailed consideration. AICD objects to the "structured unfairness" of the Bill that would have unintended and undesir-able side-effects in terms of director liabilities. (See the AICD website under policy and submissions)
Australia as a branch economy?
The Business Council of Australia has been warning the Government of the danger of Australian companies moving offshore because of the regulatory and taxation regime in Australia. This theme was picked up by the CEO of AMP, Paul Batchelor when speaking at a NSW Division lunch on March 1. Batchelor referred specifically to the unfair rules surrounding franking dividends. While most of AMP's profits were now sourced outside of Australia, he said the AMP was firmly committed to Australia, but in the business world there is no such word as never.
Asia's loss is Australia's gain
A study released last month by Sydney-based Orient Capital shows that European institutional investors who currently hold more than $A18 billion in Australian equities continue to regard Australia as a safe haven from Asia. The current Asian economic slowdown will accelerate this trend.
ASX disclosure change
Directors of listed companies may be forced to register trading in their company's shares within 48 hours under changes to listing rules proposed by the ASX. An exposure draft circulated by the ASX also aims to take away the power of chairmen to vote shares as they see fit. (AICD's Corporations Law Committee has considered the issue and a submission is being prepared. Government wins policy diving competition In a policy backflip of Olympian proportions, the Government has relented on simplifying the BAS requirements, put the unfair taxation of family trusts (Entity Taxation) in the too-hard basket and will reduce the petrol levy. John Howard and Peter Costello have shown their colleagues what good sports they are and we can only hope that Financial Services Minister Joe Hockey enters the arena and changes his mind on the square root formula on the number of shares required to call an EGM. AICD wants a simple 5 percent of the total number of shares on offer.
No common board practices
A recent Egon Zehnder study of the board practices of corporations on five continents suggests that a common recognition of the board's role in corporate governance is emerging but that wide variety in board practices continues. Corporate performance and strategic planning ranked highly as the two most important issues for board oversight.
AICD has written to the government expressing concern on the delay in introducing capital gains tax rollover relief for company demergers. AICD would like demerger relief to:
• disregard the gain or loss made by the parent company on disposal of the subsidiary being distributed;
• defer any capital gain made by shareholders on receipt of the distributed property; and,
• apportion the cost base of the parent company shareholders' shares between the original interest and the distributed interest in proportion to their respective values at the time of the distribution.
Globalisation not just an Aussie swearword
The German Bertelsmann media group is one of the world's largest, with more than $US27.8 billion in the bank and sales last year of 13 billion pounds. It is still largely privately-owned and some would say secretly run. All that is changing. According to the Sunday Times last month, Bertelmann's owners have become converts to the Anglo-Saxon "shareholder value" culture and accounting practices. In a deal with the Belgian firm RTL (Europe's biggest television company), Bertelmann handed over 25 percent of its equity and will allow RTL to sell this on the open market. It has been described as a European milestone towards a different economy of corporate governance and structure.
Mergers and Acqusitions
Australian M&A reached new levels last year with $82.29 billion worth of deals announced, according to Thomson Financial Pty Ltd. This far outpaces global M&A transactions. Sceptics in the financial markets say that far too many M&A deals are simply a rush of blood to the head of the CEOs who are under pressure to pump up the share price and increase shareholder value. An article in Mckinsey Quarterly, says that half of the big mergers, acquisitions and alliances fail to create shareholder value. "For shareholders, the sad conclusion is that an average corporate-control transaction puts the market capitalisation of their company at risk and delivers little or no value in return".
Employee share ownership
Workplace Relations Minister Tony Abbott is making employee share ownership a priority. This policy was a favourite with his predecessor Peter Reith because of the assumption that employee share ownership would diminish the influence of unions. Senator Richard Alston also took up the employee share ownership cudgel telling a Australian Venture Capital Association lunch that for Australia to be competitive we need to match schemes on offer in the US and Singapore.
BP under siege
The environmentally friendly oil company BP Amoco is facing a shareholder activism assault. At issue is BP's 2.2 percent stake in Beijing-controlled PetroChina which has operations in Tibet and Sudan. Dissident shareholders backed by some institutional investors in the US want to put four resolutions to BP's April AGM. Mounting a minority shareholder resolution in the UK is not easy in that at least 100 shareholders holding an average of 100 pounds each of stock is required to get a resolution across the line. BP has blocked the resolutions.
From watchdog to peeping tom
The ACCC asked a Federal Court on February 15 that it be allowed to use its broad investigative powers to pry into the secret communications between companies and their lawyers. According to an AFR article (February 16) the ACCC also wants the court to declare that companies cannot refuse to produce documents on the grounds of legal professional privilege.
Global economic downturn
A steep fall in Japan's industrial production sent the Nikkei index to a 15-year low last month forcing the Bank of Japan to cut interest rates. In the US, the gloom got gloomier with fourth quarter GDP growth revised down to 1.1 percent from 1.4 percent. In Australia, the latest trade figures signal a slowdown in both imports and exports.
Bronwyn Bishop and aging directors
Federal Minister for Aged Care Bronwyn Bishop is putting together a national strategy for an aging Australia. One aspect her department is reviewing is the law relating to age limits of directors. AICD sent the Minister its policy on this issue. The policy is in line with the minister's thinking. On a similar vein, AICD has made a submission on Australia's Retirement Income System-Long term Savings (Framework Principles).
The best of times and the worst of times
Pearl Meyer & Partners, the New York-based consulting firm released a study late last month showing that investors, retirees, speculators and workers who have shares or options all suffered last year as a result of lower company profits. The big winners however were the CEOs of the big US industrial and services companies with average sales of more than $US22 billion. The average CEO package contained $US6.45 million in stock (up 28 percent); annual bonuses of $US2 million up 20 percent while base salaries rose 4 percent to $US1.13 million. It begs the question of how CEO salaries, at least in the US, still need to balance the equation between pay and performance.
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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