Stephen Jones (Whitlam, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

The Corporations Amendment (Meetings and Documents) Bill 2021 concerns the procedures by which public companies execute their government obligations under the corporations law. It makes permanent a number of temporary changes to those procedures—changes that were introduced to help public companies manage their obligations under the laws during the height of the COVID period. These temporary changes are mostly due to expire next year. Labor supports making them permanent by amending the Corporations Act.

The requirement to hold annual general meetings is the most significant of the governance procedures this bill is concerned with. For many decades, public companies have been required to hold their annual general meetings in person. Typically, depending on the size of the company, this was done in a public forum like a ballroom or similar. Clearly this arrangement was not suitable once the pandemic hit. Labor was happy, therefore, to temporarily move to virtual annual general meetings to avoid having shareholders and executives congregate in close quarters, which obviously would have been a breach of the public health orders then operative, and failing to have the annual general meeting would have been a breach of their obligations under the corporations law. It was a sensible and pragmatic workaround. We have always been guided by the best health advice, and clearly these arrangements did not fall within that advice.

For many months now annual general meetings have been conducted via teleconference, with participants dialling in, or by videoconference, with participants participating from their laptop computers, their tablets or their phones. This means the means by which these meetings are taking place has changed, but the purpose of the annual general meeting has not. AGMs serve as an important forum by which shareholders who own a company are given an opportunity to have their say in the running of that company. It gives them a means of scrutinising and holding to account the decisions of the executives in whom they place their trust and their investments. The purpose of annual general meetings is to elect directors and vote on senior executive positions and remuneration. Motions are debated and voted on. Questions can be asked of management with the expectation of an answer.

In Labor's view, it is important that the sanctity of these rights—shareholder rights, the company's owners' rights—be preserved. We are concerned about the potential for virtual AGMs to dilute them. It's not in the wording of the legislation, but there is potential for the practice to be misused. They effectively give the chair of the meeting the equivalent of the remote control to the TV, and as anyone sitting in their living room watching the TV of an evening knows, whoever has the remote control controls what everyone else watches. Potentially it's exactly the same thing. That's why our initial support of the move to virtual AGMs was contingent on them being in place temporarily for the duration of the pandemic, and that's why we will be moving amendments at the third reading stage of this bill that will establish a statutory independent review process of how these virtual AGMs are working.

It is important to note that it's not mandatory to have a virtual AGM. It'll be in the shareholders' hands in the first instance as to whether it's a wholly virtual, a hybrid or a traditional AGM. It's our intention that such a review would be conducted through a prism of preserving the shareholders' rights. There is no downside to such an approach. If a review finds that shareholders are being restricted from asking questions or properly debating motions and the remuneration and appointment steps are being frustrated, steps can be taken by this parliament, based on the recommendations of that review, to address those deficiencies. If, on the other hand, the review finds that there has been no dilution of rights, in fact or in practice, shareholders and executives can have both confidence and certainty that the new system is operating as this parliament intends it to.

We could have insisted on such a review before offering our support for the bill, but we recognised that our corporations need certainty before the exploration of the temporary arrangements next year. We do not want to stand in the way of such certainty, but we maintain the need for a review, and I strongly commend our amendment to the House, because the fact is that, if such a review can provide confidence in virtual AGMs, there will be some benefits out of that.

Anyone who has followed these propositions closely would know that there is some consternation amongst some of the shareholder groups and the accountability groups that it will be used as a forum to override shareholder rights. On balance, we don't think it does that, but those objections cannot be lightly dismissed, and the proposition that we advance will enable them to be ventilated. Without giving away anything else that I've said in my meetings directly with directors' representative organisations, quite simply, the challenge, the ball, is in their court. If these new powers are dealt with responsibly, the review will find that and shareholders will be happy with the new arrangements. As somebody who comes from a regional area, I'm quite certain that most of the shareholders who come from the electorate that I represent—as well as people who reside in regional New South Wales or in other parts of Australia, particularly if they are working—cannot take a day off work to travel all the way to Sydney, Melbourne, Brisbane or occasionally Perth, where most of the AGMs are to attend such an AGM In fact, there's a very valid argument that suggests allowing a mechanism for virtual AGMs is actually extending and expanding the capacity to participate in these important shareholder forums.

Despite the importance of AGMs to the proper execution of corporate governance, the fact is that only a small percentage of shareholders regularly attend them in person. As I said, it is particularly difficult for people who live in regional Australia or people in full-time work. Often large shareholders, for entirely valid reasons, attend via proxy using some of the excellent proxy services offered in the market to do so. But, for many smaller shareholders, attendance is made difficult by, for instance, lack of time through work obligations or even by the lack of disability support. Virtual AGMs do offer the potential means to surmount these tyrannies, which would be a welcome development.

But we do need to be mindful of ensuring that attempting to improve participation in AGMs by making them virtual does not have the opposite effect. If shareholders feel that they are less able to ask questions and hold executives to account, that is exactly what would happen. That is why we need a proper independent review, and that's why Labor calls upon the House to support our amendments to this bill. I commend the bill to the House, and I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House calls on the government to ensure that an independent review of this bill is conducted within two years of its implementation, with particular emphasis on the ability of small shareholders to hold company directors to account through general meetings".

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