Labor warns shareholders to be ‘alert and alarmed’

The Australian Labor Party has signalled it will be moving amendments to theCorporations Actspecifically aimed at ensuring publicly-listed companies cannot use shareholder resolutions to circumvent Commonwealth legislation.

The Opposition spokesman for Financial Services and Corporate Governance, Senator Stephen Conroy says recent advice provided by the Australian Securities and Investments Commission (ASIC) to a Senate Estimates Committee suggests companies can use shareholder resolutions to escape the consequences of theCorporations Act.

Pointing to recent shareholder resolutions affecting BHP Billiton and Boral, Senator Conroy says ASIC has confirmed that the so-called 100 member rule can be displaced by a decision of shareholders of a company.

“ASIC is saying that a company can (by agreement with its shareholders) override parts of theCorporations Actsuch as the 100 member rule in terms of both proposing resolutions and calling company meetings,” he says.

“This has unprecedented implications for the interpretation of theCorporations Actand all shareholders in Australia should be alert and alarmed over this development,” Senator Conroy says.

Referring to a resolution carried by Boral shareholders which altered the 100 member rule by dictating that shareholders would need to have five per cent of the capital or Board approval in order to propose a special resolution, Senator Conroy says he regards this as “a direct attack on shareholders’ rights”.

“Accordingly, I plan to move an amendment to theCorporations Actto ensure that Boral does not set a precedent for other companies to circumvent the spirit of the Act,” he says.