Woodside Petroleum's Shell buyback has been endorsed by the Australian Shareholders' Association but will need a lot more support to get over the line.
The ASA's backing will hold some sway with Woodside's 200,000 small shareholders but the association has spoken for an average of just 1250 investors representing only 2.35 million Woodside shares, or 0.3 per cent of the company, in recent years.
The ASA said there was "merit" in winning Woodside's independence from Shell, despite its reservations over the inclusion of franking credits in the transaction.
"The principle of treating all shareholders equally is strongly held by ASA but, on balance, we believe the benefits, including higher future dividends and earnings per share growth, out-weight the negatives," policy and engagement co-ordinator Stephen Mayne said.
Woodside's plan to use one-third of its franking credits to part-pay for the $2.7 billion ($2.9 billion) selective buyback of half of the 18.6 per cent Woodside holding being divested by Shell has attracted the opposition of proxy advisers.
Woodside shareholders will vote on the proposal on Friday.