Business and professional groups have renewed calls for the abolishment of the rule allowing 100 shareholders to call a company meeting regardless of how many shares they own.
Opponents have long argued the contentious but little-used provision of the Corporations Act gives shareholders with little financial interest in a company too much influence and is open to abuse by special interest groups.
State attorneys general rejected a bid to amend Section 249D seven years ago. However, it is back on the agenda as part of a review of the annual meeting and shareholder engagement by the Federal Government's Corporations and Markets Advisory Committee.
Submissions by major groups to the review back abolishment, noting that a separate provision allowing shareholders holding five per cent of a company to call a meeting would remain in force.
"The need to encourage shareholder participation must be balanced against the need to manage the associated costs to the company and the body of shareholders as a whole," the Australian Institute of Company Directors said.
"The right of 100 members to call a general meeting does not represent an appropriate balance".
Chartered Secretaries Australia said companies and shareholders were better served by the five per cent test, describing it as "a reasonable balance of the rights of shareholders to have matters addressed with the importance of allowing directors to effectively run the company".
"To put corporations and their shareholders, the majority of whom are not expected to support the resolutions put forward at a general meeting, to the expense of the meeting, is mischievous."
The Law Council of Australia said the 100-shareholder rule was a legal anomaly which "does not make sense in today's context of large listed companies".
It said also that Section 249D(1b) put bigger companies particularly at risk of attack, citing activist group GetUp!'s requisitioning of a meeting of Woolworths last year, effectively to protest the company's investments in poker machines.
The 250 requisitioning members represented just 0.05 per cent of Woolworths' 430,000 shareholders.
The supermarket group only avoided the cost of a separate meeting by appealing to the Federal Court, winning approval to hold the gathering alongside its annual meeting in November.The Australian Shareholders Association said it was "open to discussion" on the 100-shareholder rule, but only in return for possible trade-offs. "We would only contemplate supporting change in this area if it was made easier for shareholders to propose resolutions for debate and vote at the annual meeting," the ASA said.
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