Proxy advice regulation is under review, a new virtual AGM guide for directors has been released, and the AICD's scholarship programs have expanded, writes Louise Petschler GAICD.

    The government’s Treasury Laws Amendment Bill (2021 Measures No. 1) — which proposes extending the COVID-19 relief measures to hold virtual AGMs and allow the electronic execution of documents — has yet to be passed by Parliament.

    The guidance includes:

    • The latest legislative and regulatory updates and what these mean for holding virtual-only AGMs, hybrid AGMs and issuing notices of meeting
    • Tips for holding AGMs in the current environment
    • Lessons from the 2020 AGM season on how to prepare, mitigate risks and effectively engage shareholders using digital technology. Guidance: Update on AGMs, electronic document execution and digital shareholder communications can be found on the AICD website. 

    Director virtual AGM guidance

    The AICD has developed joint guidance with the Governance Institute of Australia, the Law Council of Australia and the Australasian Investor Relations Association regarding virtual AGMs, electronic communications and electronic signatures.

    The aim is to help organisations navigate ongoing uncertainty around holding AGMs.

    Scholarships for AICD courses

    As part of our commitment to strengthening society through world-class governance, the AICD provides targeted scholarship programs throughout the year.

    Our NFP scholarship program has placed 130 directors of small NFPs in the AICD Governance Foundations for Not-for-Profit Directors training, which is being offered across Australia until the end of June.

    Applications for NFP scholarships will open again in the new financial year. For details, contact Phil Butler, NFP sector lead, Advocacy via

    This year, the AICD has also made two online programs available: 20 places for regional directors in the Foundations of Directorship program and 20 places for First Nations directors in the Company Directors Course. To learn more, visit

    In April, the federal Treasury released a consultation paper on options to promote greater transparency of proxy advice.

    The AICD recognises that proxy advisory firms fulfil an important function in the Australian market. They provide research and governance voting recommendations to clients (institutional investors, asset owners, pension funds and superannuation funds) based in Australia and overseas.

    Listed company directors have highlighted the increasing influence of proxy advice on voting over recent years. Depending on a company’s share register, an individual proxy advisory firm can wield significant influence over voting outcomes. A single proxy adviser could advise 20 per cent of a company’s institutional investor base, but influence a much greater proportion of votes cast — well in excess of requirements for remuneration strikes, for example.

    This impact is extended by the fact that offshore investors may follow the voting recommendations of the proxy advisory firm “automatically”, with limited or no engagement with the listed company. Given this significant influence on voting recommendations, the AICD has argued there is merit in having some ground rules apply to the proxy advice industry. This is based on feedback from listed company directors about challenges with some proxy advisory firms on engagement, accuracy, right of reply and potential conflicts of interest with the provision of ancillary advisory services.

    The AICD has previously suggested that some of these issues could be dealt with under a robust industry code approved by the Australian Securities and Investments Commission (ASIC), although the sector’s appetite for this has been low to date.

    Reform options include allowing issuers to review proxy advice in advance with a “right of reply”. Another is applying Australian financial service licence obligations to governance proxy advice. Other jurisdictions — such as the European Union — have also moved to introduce regulatory requirements for proxy advisory firms, recognising their impact on corporate governance votes.

    AICD Regulatory Reset Priorities

    The AICD wants fair, fit-for-purpose and modern regulations that support diligent directors in governing for growth. Our current reform priorities include:

    • Modernised corporate laws enabling virtual meetings and communications
    • Better-balanced director liability settings, supporting diligent directors to govern for growth
    • Reduced risk of opportunistic securities class actions
    • NFP funding reform and certainty, including fundraising reform.

    In the United States, new Securities and Exchange Commission (SEC) rules are currently set to commence in December 2021. These require proxy advice and voting recommendations to be free from false or misleading statements or material omissions. The SEC rules would also require disclosure of conflicts of interest, provision of advice to companies at the time or before it is issued to clients, and a right-of-reply obligation.

    In the United Kingdom, regulations passed in 2019 now require proxy advisory firms to disclose how they conduct their business, produce advice and recommendations and manage conflicts of interest.

    Treasury’s consultation paper also invited views on options to increase the disclosure of superannuation fund trustees on voting decisions and for proxy advisory firms to demonstrate independence from super funds. The AICD has not previously considered these issues and welcomes the views of members via

    Treasury’s consultation has already sparked significant debate, including its proposals for Australian financial services licensing and disclosure and independence in superannuation.

    The AICD has made a submission on the consultation paper; the consultation closed on 1 June 2021.

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