100-member rule bill sent to a Senate Committee inquiry
The bill repealing the ‘100-member rule’ to call a general meeting — the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 — has been referred to the Senate Economics Legislation Committee for inquiry and report by 11 February 2015.
The ‘100-member rule’ is open to abuse by special interest groups who threaten to call a general meeting between AGMs unless the company negotiates on marginal issues that do not have majority shareholder support. This is a vexatious practice, as it can cost a large listed company many millions of dollars to hold an EGM — a cost to shareholders who do not support the issue of the special interest group. For example, Woolworths was forced to hold a general meeting to consider a resolution on $1 limits on poker machines. The meeting cost $500,000 to run but the resolution only received support from 2.5 per cent of shareholders.
The bill still allows for groups with five per cent of the votes that can be cast to requisition a general meeting — ensuring that there is a level of shareholder support before other shareholders are put to the cost of a meeting.
Importantly, it also preserves the right of 100 members to put issues on the agenda of the annual general meeting (AGM) which is a central plank in a corporate governance framework.
In 2005, the Corporations Amendment Bill (No 2) recommended the repeal of the rule. The Parliamentary Joint Committee which reviewed the bill also supported its repeal. Despite bipartisan support momentum stalled, and this step was never taken. It is to be hoped that this separate Senate Committee will support the bill this time round.
Submissions are due 20 January 2015 — information can be found here.