ASIC warns: Don’t dodge shareholders’ questions

AUSTRALIA’S corporate regulator has put companies on notice about ensuring investors can still ask questions verbally to directors as this year’s AGM season begins in earnest.

Covid-19 has relegated AGMs from hotel ballrooms and plush offices to Zoom and other virtual realms, after Treasurer Josh Frydenberg granted companies relief at the onset of the pandemic.

Mr Frydenberg has extended this relief until next March. But an amendment to Treasury laws passed in August means companies must still give shareholders the right to ask questions verbally at AGMs rather than in writing.

Following the law change, the Australian Securities and Investments Commission said it would be looking out to ensure shareholder rights are upheld as most companies prepare to hold their annual meetings in coming weeks.

“ASIC expects companies to comply with all of their AGM obligations. We monitor compliance and will take appropriate action as required,” an ASIC spokesman said.

The warning comes after many companies, including Crown Resorts, took written questions from shareholders at virtual AGMs last year, raising concerns from investors about boards vetting and potentially silencing prickly questions.

Veteran fund manager Geoff Wilson, who oversees $4bn worth of assets across various public and private vehicles via his eponymous Wilson Asset Management, said it was vital smaller shareholders had their say at AGMs.

“I am very passionate about small shareholders rights and their ability to ask questions without being censored,” he said.

“We live in a democracy. Shareholders own the company and every director must be accountable to all shareholders.”

AGM attendance has risen significantly in the past decade, reversing a decline, after the Corporations Act was amended to allow a “two strikes” law, which meant the entire company board faced re-election if shareholders twice rejected its remuneration report.

An AGM is the only time in a year that many investors can scrutinise a board directly and have their say on a company’s performance and strategy.

Australian Council of Superannuation Investors CEO Louise Davidson said that since the pandemic began many companies had sought to amend their constitutions to make virtual AGMs “business as usual”, which was a concern given the potential to cloud transparency.

“The ability for shareholders to ask questions of companies at AGMs is a fundamental shareholder right,” Ms Davidson said.