Days of ‘100 members’ numbered as bill tabled

THE federal government yesterday tabled the bill to abolish the “100 members” rule.

Critics say the controversial rule can cost companies with big share registers, such as Telstra, ‘a mind-boggling amount’ Picture: Liam Kidston.

THE federal government yesterday tabled the bill to abolish the “100 members” rule that allows a small number of shareholders to requisition an extraordinary meeting of a listed company, as part of the much-touted push to remove red tape.

The move was driven by Governance Institute of Australia, formerly Chartered Secre­taries Australia, which said the rule left companies open to “this vexatious practice” that is theoretically the province of climate and environmental activists — but which, according to one of the rule’s supporters, Stephen Mayne, has very rarely been used.

“The last time an ASX company had an extraordinary meeting on a different day to the annual meeting was Gunns Ltd in 2003,’’ he said. Mr Mayne was until recently a consultant with the Australian Shareholders Assoc­iation, which wants the rule retained, but he resigned to stand for election to five company boards in coming weeks.

Tim Sheehy, chief executive of the Governance Institute, said that even after abolition the law would still allow groups of 100 shareholders to make their point by putting up resolutions to be voted on at annual meetings — “a central plank in a corporate governance framework”.

Mr Sheehy noted the main issue was the calling of EGMs, which could cost companies such as Telstra with big share registers “a mind-boggling amount”, which would be a cost to shareholders who might not support the issue being put up by a special-interest group.

Mr Mayne said a workable compromise would be abolition of the 100 shareholder rule for EGMs, counter-balanced by the lowering of the bar to a “10 shareholder rule’’ to put up resolutions at annual meetings, rather than 100 shareholders.

“That would actually reduce red tape,’’ Mr Mayne said.

Mr Sheehy noted that the 5 per cent rule — which allows any shareholder or group of shareholders representing more than 5 per cent of a listed ­company’s ­ordinary voting shares to call an extraordinary meeting — remained in place as before and had his organisation’s support. “That rule stays — absolutely,’’ he said.

He said he was confident that the move to abolish the 100 member rule for EGMs had “good ­bipartisan support’’.

A previous attempt in 2005 by his organisation to have the rule abolished did not get up, despite having significant support from major industry groups such as the Institute of Company Directors and what is now the Financial Services Council.