Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

[by video link] Can I first say to Senator McKim that I'm a great supporter of profit and a trenchant critic of losses. I think the pursuit of profit is quite a noble ambition, and we shouldn't disregard the point that our great enterprises across this country provide growth, jobs and opportunities for all sorts of people. I come at this from a totally different philosophical background to Senator McKim, which should surprise no-one.

Senator McKim did not refer to any of the many checks and balances that are contained in this bill, the Corporations Amendment (Meetings and Documents) Bill 2021. Let me go through some of them. There can only be a wholly virtual meeting if it is provided for in the constitution of a company. That means one of two things: that when someone becomes a shareholder of the company the constitution of the company provides for a virtual meeting; or that the constitution of a company is amended when someone is a shareholder to permit only virtual meetings. That can only occur if a special resolution is passed, and a special resolution requires at least 75 per cent of the votes cast on a resolution in favour of the amendment to the constitution. That is an extraordinarily strong check and balance. I would expect that, and I think there have been examples where, companies who have been considering amendments to their constitutions to allow for only virtual AGMs will find that many stakeholders—including those companies with large retail shareholder bases—will be against amending their constitutions, and that those amendments to the constitutions simply won't proceed. I think in many cases there will be checks and balances through the constitutions of the companies.

The second point I want to make is that the bill provides that there must be a reasonable opportunity for shareholders to participate in the annual general meetings of companies. Whilst some stakeholders have raised concerns, with some practical examples with respect to how that has worked in practice during this COVID pandemic period, most companies have worked well with their share registry service providers and others to ensure that shareholders have that reasonable opportunity to participate in AGMs where those AGMs are conducted on a virtual basis.

So we've got the check and balance in terms of the constitution; the constitution of the company must provide for virtual-only AGMs. Secondly we've got the check and balance with respect to providing a reasonable opportunity for all shareholders to participate in the AGM, to ask questions of the board and the senior executive team—as they should be entitled to in an AGM context—and also to make observations, raise concerns and raise questions of the auditor. Whoever is there at the AGM has the opportunity, through the AGM, to ask those questions and raise those concerns. That's the second check and balance. The third check and balance is there is going to be a review of this legislation and how it has worked in practice after two years. That's the third limb of the protections which are contained in this proposed amendment to the Corporations Act. When you look at those checks and balances in their totality and when you look at what has actually happened in practice over the course of the COVID pandemic and how corporate Australia has responded positively in terms of making sure that its shareholders have an opportunity to participate in annual general meetings, that should give us all a great deal of comfort.

I say in response to the comments raised by Senator Marielle Smith—and I think they were earnestly made—with respect to the participation of shareholders in a regional context: prior to companies providing hybrid AGMs, regional shareholders were even more disadvantaged because they would have had to travel large distances in order to physically participate in annual general meetings. So I think these reforms should be looked at in a global context, and it should be acknowledged that shareholders actually have more opportunity to participate in AGMs where the information technology is provided to allow them to participate in virtual AGMs. In fact, more shareholders would be able to participate than used to be the case at purely physical AGMs.

Lastly, as someone who did serve as a company secretary of an ASX-listed public company, I want to say that I think many companies—and certainly most companies in the ASX 100, which are the top-listed public companies—will recognise the benefit of having a physical AGM in addition to a virtual AGM. I can well remember during the height of the global financial crisis how much it meant to the senior executive team of the company I worked for to actually have physical AGMs where we had an opportunity to liaise with our retail shareholders who supported us through those very, very difficult times. I remember a few of my favourite retail shareholders, Albert and Sam—and I must find them, so I can convey to them that I've referred to them in this debate—and I recall some of the fine points they made at many of the AGMs that we held during those difficult times. There certainly is a place for physical AGMs, and I suspect that most companies which have large retail shareholder bases will continue to have them, but companies should have the choice. For some companies that struggle even to establish quorum at a physical AGM, giving them the power to conduct a wholly virtual AGM will actually provide a powerful driver towards achieving economy and saving costs for their shareholders. That shouldn't be forgotten either.

The other thing that shouldn't be forgotten is that this bill contains other reforms. There are very important reforms in relation to the execution of documents, so that those can be done through technology-neutral ways. There are also important reforms in relation to the conduct of polls, so that most important resolutions that are put before shareholder meetings and AGMs will have to be determined by poll. In addition to that, those shareholders who represent at least five per cent of the total shareholder base would also have the right to be able to call for the involvement of an independent expert or an independent conduct of the poll to make sure it's being done in the correct way. That is certainly a reform which is supported by the proxy advisers who Senator McKim refers to as being a positive development in terms of corporate governance practices.

This bill does more than just deal with virtual AGMs. Insofar as it deals with virtual AGMs, I provide my 100 per cent support. I think it's a welcome initiative. There are checks and balances through the constitutional provisions, through the two-year review and through the reasonable opportunity for shareholders to ask questions and make observations, but it also provides important reforms with respect to the execution of documents in a neutral technology sense and also through the conduct of polls.

With those comments, I'm very, very happy to commend this bill to the Senate.