Company directors call for AGM overhaul

“The AGM process is failing to keep pace with our changing world, both in terms of technology and options for shareholder participation,” said John Brogden, Managing Director & Chief Executive Officer of The Australian Institute of Company Directors (AICD).

An AICD submission supported the proposal to update legal requirements for distributing AGM papers but argued that shareholders should be notified individually of meeting documents unless they expressly choose to rely on general public notices.

“This is an example of where the Corporations Act has become outdated. Allowing meeting notices to be distributed by prevalent forms of technology by default, rather than by post, is a sensible first step in removing parts of the Act that restrict the use of digital communication,” said Mr Brogden.

“It is the AICD’s view that the proposal should go further and recognise email as an acceptable default mode of delivery,” he said.

The AICD recently conducted a poll of its members and found strong support from directors for modernisation of the AGM process in general.

“The majority of respondents favour retaining the physical AGM but also believe that meeting protocols and voting procedures should be modernised,” said Mr Brogden.

“Directors recognise participation of shareholders is a crucial component of good governance. Smarter use of technology could enhance shareholder engagement in AGMs, from distribution of notices through to direct voting.”

The poll of close to 500 members of the Australian Institute of Company Directors found that:

• More than 88 per cent agree that all listed companies should be required to offer direct voting, so that shareholders who do not attend can vote without a proxy
• More than 74 per cent believe it should be compulsory for all voting at listed company AGMs to take place via a poll, instead of other methods such as a show of hands
• More than 84 per cent believe that electronic voting should be permitted, with only the reporting, questioning, deliberating functions occurring at a physical meeting
• More than 82 per cent agree that directors standing for election at an AGM should be required to answer questions from shareholder
• 45 per cent support the delivery of AGM notices and materials by emails unless shareholders request otherwise, while another 37 per cent believe these documents should be posted online and shareholders be notified of their availability electronically.

“It is the AICD’s strong view that the Corporations Act should be subject to review in its entirety to ensure that, to the extent possible, it does not limit the use of modern technology in communications,” Mr Brogden said.

A copy of the AICD’s submission is available below: