Nick Xenophon (SA, Independent) Share this | Hansard source

My brief contribution relates to two aspects of this legislation that I have very serious concerns about—in fact, I oppose them—and I want to state that on the public record.

There is one amendment that relates to the issue of stock options. At the moment a listed entity needs to disclose stock options that key management personnel are given; whether they are offered and whether they have lapsed or not. That is something that the market knows about, something that the market hitherto has been aware of, but this bill seeks to remove that. I think that is a retrograde move. I think we need to know about those stock options, even if they are not taken up, in the context of a company's behaviour and the inducements given to senior personnel. If it is not taken up, there may well be a reason for that that could be informative of the marketplace.

The other amendment that I am particularly concerned about relates to the 100-member rule contained in the Corporations Act. This rule bestows certain powers on members of a company who are entitled to vote at a general meeting of that company. These powers include the ability to require directors of a company to hold an extraordinary general meeting, to put a resolution on the agenda of general meetings and to circulate material to other members of the company. This bill will remove the first of those powers—namely, the ability of 100 members to call for an extraordinary general meeting of the company. Instead, an extraordinary general meeting could only be called when members making up five per cent of the total shareholding of the company agree to call one.

In its submission, the Australia Institute emphasised that shareholder rights form an essential part of corporate governance. It stated:

The removal of the rule would result in a reduction in shareholder rights, which form an essential element of corporate governance. Regardless of the retention of the abovementioned 100 member provisions, removal of subsection 249D(1) limits corporate accountability to the owners of the company. In addition, it would be an obstacle to civil society, which increasingly plays an important role using shareholder activism in pursuit of socially responsible corporate behaviour.

In November 2012, over 200 Woolworths shareholders, with the help of GetUp!, called for an extraordinary general meeting of the company in order to vote on a resolution in relation to Woolworths' ownership of poker machines. Woolworths, through its hotel arm, the ALH Group, owns approximately 13,000 poker machines and makes over $1.2 billion in poker machine losses. If successful, the resolution would have prohibited Woolworths from being involved in the poker machine industry unless it agreed to the $1 maximum bet reform as recommended by the Productivity Commission—$120 in hourly losses. I know that Senator Di Natale from the Greens and my crossbench colleague Senator Madigan have been long time advocates of this.

While the resolution was ultimately defeated, it nonetheless enabled shareholders to force Woolworths and its shareholders to consider whether profiting from poker machine losses is socially responsible corporate behaviour. I was at that meeting. The questions asked were relevant, and at least there was some engagement with the board. On that occasion, the extraordinary general meeting occurred before the AGM because there was a court case in respect of that so that the company would not have to be up for the expense of two separate meetings and the costs involved. I understand that. I would have thought allowing at least 100 shareholders the right to call a company to account on specific items that they can set on the agenda as part of an extraordinary general meeting is a good thing in corporate governance. I think it is the wrong approach to take. The barrister Peter R Graham QC in his submission characterised this bill as destructive rather than deregulatory, and I agree with him.

I cannot support those elements of the bill, both the 100 shareholder rule and the disclosure of remuneration reporting requirements, because they are not removing red tape but are actually removing accountability on the part of public companies.