今日热门事件

Check against delivery

I would like to begin by acknowledging the traditional owners of the lands on which we鈥檙e meeting, the Gadigal people of the Eora nation.

I would also like to congratulate AIRA for hosting this inaugural conference. As Ian [Matheson, AIRA] mentioned, I鈥檝e been involved in other conferences that have been put on and I鈥檝e always found it really interesting and topical and on the pulse of what鈥檚 happening in corporate Australia and investors and consumers, which is where 今日热门事件focuses our attention.

I also wanted to say AIRA is good at writing very well-written, brief, and to the point submissions, so when I think about the Statutory Review and the communication of key issues, I think you do a great job, whether it be bringing it to Treasury and others鈥� attention issues that aren鈥檛 always front of mind for people who are working in the policy and regulatory space. The corporate perspective, particularly your perspective, is always really welcome and well expressed, so thank you.

I will be responding to some of the issues that were raised through the Statutory Review and I think as the punchline, you鈥檙e going to have mixed views about where we鈥檝e landed, but hopefully some of it is welcome. I am also keen to leave time for questions because it鈥檚 great to hear people鈥檚 views on things.

AGM best practice is a fantastic thing to focus on. Technology is entirely reshaping industries, businesses, and daily life 鈥� particularly in your profession. Today really is a great opportunity to reflect on the technology changes that affect AGMs more broadly and embrace them.听

To frame my discussion, I want to remind you of the phrase 鈥渢he medium is the message鈥�, which was coined by a Canadian communication theorist, Marshall McLuhan. At the time, the idea of 鈥渢he medium is the message鈥� was revolutionary because it recognises how and where something is said shapes what is said 鈥� and often speaks volumes more.听

Where and how in our context for today is the AGM and that context really does affect what your CEOs, chairs, and other leaders in your organisations are conveying and also what they鈥檙e hearing from your shareholders at the AGM.

Through that lens of the medium being the message, we can really see how important AGMs are as a powerful mechanism for facilitating good governance, even as technology disrupts and redefines how we communicate.听

Where else other than the AGM are leaders of businesses required to meet stakeholders 鈥� in this case, investors 鈥� to look them in the eye, and explain what they are doing? So that medium being the message is really important.

From ASIC鈥檚 perspective, this ability of investors to engage with directors and management effectively, exercise their rights, and hold companies to account is a really fundamental driver of good corporate governance 鈥� and obviously good corporate governance is essential for the effective operation and performance of both companies, our market, and our economy. So that form 鈥� the AGM 鈥� really enables the function of governance.听

There really are a lot of governance challenges in Australia at the moment. I don鈥檛 want to get drawn on them particularly but that heightens the focus of AIRA today on AGMs and more generally on getting the fundamentals of governance right.听聽

We鈥檝e framed today鈥檚 discussion as 鈥渕eeting expectations鈥� 鈥� both the verb and the noun 鈥� specifically how you as trusted advisers can support compliance with the regulatory requirements that apply in relation to AGMs in circumstances of technological change.

The price of flexibility聽

But first, a moment to step back in time. Last Thursday (20 March) was somewhat of an unsung anniversary.听聽

It marked five years since 今日热门事件first took steps to facilitate companies and registered schemes to hold virtual-only member meetings, in the beginning days of the COVID-19 pandemic. This was done by way of a no-action position if these entities could not otherwise comply with the Corporations Act requirements to hold virtual AGMs.

It was clear this flexibility was needed. We can all remember the challenges of that time, particularly in February, March, April. The dizzying series of 鈥渦nprecedented measures鈥�, borders being closed, the quick maths to determine how many people you could have in a room, including one supposed to be hosting an AGM.听聽It was pretty mind blowing at the time.

So that decision was pretty straightforward but it also proved to be a sensible first step into the 21^st century for company meetings, and we were really pleased at 今日热门事件to see it later become a permanent feature of the Act in 2022.听

Like many other pandemic-era developments, the expansion of virtual and hybrid AGMs has presented both benefits and challenges.听I鈥檓 sure you could talk to me about those in detail, we recognise that鈥檚 been so. And like other reforms of this period, sometimes it鈥檚 a little hard to tell at this point if it鈥檚 a permanent shift or a pendulum swing.听聽

On the one hand, the ability to hold hybrid and virtual meetings has really democratised and improved access to meetings and facilitated greater shareholder participation.听聽

This is an outcome we support, given one of our objectives as a regulator is to promote the confident and informed participation of investors in the financial system. Supporting shareholders to exercise their rights is entirely consistent with that objective.听

On the other hand, we are mindful that flexibility comes at a cost and can impose a burden. I note the representations from AIRA on this topic to the Statutory Review[1] consultation last year.听

Just as an aside, I would like to mention to you that 今日热门事件has recently convened a Simplification Consultative Group[2]. Our Chair Joe Longo spoke about it at our Annual Forum last year in which he stepped back as the regulator and looked at the regulatory framework 鈥� statutory instruments, guidance, info sheets, all these different elements 鈥� and reflected on the cost associated with very high levels of complexity in the frameworks we administer and that your companies are complying with.

Recognising that there鈥檚 been efforts before 鈥� including by the Law Reform Commission and others 鈥� to think about regulatory complexity, we are starting an additional push to see what we can do at 今日热门事件to achieve practical examples of simplification in relation to areas preferably within our gift. We create instruments, guidance, info sheets, surveillance data requests, so we are asking can we do them more simply or in a way that simplifies how they are felt by people who are receiving them?

But it will also generate some ideas about law reform as well and we can鈥檛 do that 鈥� it鈥檚 the parliament who does that. But we can act as a conduit between areas of the law and the legislative framework that are particularly complex and work up examples of why they are particularly problematic. 聽We can contribute to that wider debate as well. So if there are people interested in that, I鈥檓 happy to take that offline and take any questions on it, but I did want to let you know about that body of work in relation to simplification that 今日热门事件has started.

Speaking of guidance though, I am pleased to announce today that in response to the recommendations of the Statutory Review of the Meetings and Documents Amendments and the Government鈥檚 subsequent response[3], 今日热门事件has released updated guidance on virtual meetings for companies and registered schemes[4].听

Of that statutory review, there were a number of recommendations and one of them was directed to us 鈥� and I鈥檒l come back to it, it鈥檚 鈥榰s plus鈥� this idea of guidance being valuable in relation to AGMs.

The guidance further explains the amendments which permit hybrid and virtual only meetings and clarifies how 今日热门事件views the law operating in certain areas. So, we did have some guidance but we鈥檝e enhanced it. We鈥檝e gone into some more detail on issues and made some adjustments.听

Specifically 鈥� and I think this might be one of the areas that鈥檚 welcome 鈥� one of our FAQ updates notes that we do not view the Corporations Act as always requiring a telephone line, so long as the virtual meeting format allows members to exercise any rights orally and in writing, and the virtual meeting technology meets the broader requirements of meetings.听That鈥檚 something I think we heard from AIRA that was of particular concern, so we鈥檝e been pleased to clarify our thinking on that.听

You鈥檒l recall what I mentioned earlier regarding the medium and the message. Where we鈥檝e come from in relation to that is [from the perspective of] is there another way, or a way in which people can ensure members have the ability to have their voice heard. For us, this is a compromise which balances the burden of compliance with the expectations of shareholders.听

We have also clarified that providing a webcast of a meeting at a physical venue does not meet the requirements of a hybrid meeting.听Our view is if that鈥檚 the only piece of technology, that鈥檚 not allowing a member to participate by asking questions or indeed by voting. That鈥檚 the second clarification I wanted to highlight but there鈥檚 others and I hope that鈥檚 helpful. There is more information available in the guidance, and that鈥檚 available on our website[5].听聽

So having covered the specific new information in relation to AGMs, I would like to spend the remaining time I鈥檝e been given to speak with you outlining principles or goals that underlie a lot of the other requirements 鈥� one being information about the meeting and the second being access. The third thing I鈥檇 like to finish on is how these things that already exist in the framework can be supplemented by best practice guidance, whether it be developed by industry or otherwise.

Clear information about the meeting 鈥�聽

The first clear purpose that underlies a lot of the provisions is around investors getting information about the meeting.听聽聽

As you know, listed entities in Australia are required to provide members with a minimum 28 days of notice prior to a meeting.听 These notices must include the date, time, and details of the meeting format, as well as any planned business, information about any proposed special resolutions and proxy votes, and an email contact.听So these are the core requirements and I think companies have an opportunity to think about how they provide and present information to assist investors make decisions. This will help meet the requirement for the notice to be clear, concise and effective.听I mean, we鈥檝e all received unclear instructions on an important invitation to various things and [understand] the value of them being clarified or as clear as possible.听

But it also comes back to that objective of confident and informed participation that I spoke of earlier and that fundamental right of the shareholder to be heard. If the medium is the message, logistics really matter.听

Additionally, certain notices of meetings 鈥� or NOMs 鈥� are required to be lodged with 今日热门事件prior to dispatch to members.听聽

We recently examined a sample of the NOMs lodged with us, in addition to those publicly available on the ASX Market Announcements Platform.听We found that some of the entities that held virtual-only meetings during our review period may not have had constitutions that expressly permitted meetings to be held in that format.听Or if they did, they didn鈥檛 notify us as required. So, we鈥檝e taken the steps of writing to those companies just to make sure that these rules that apply to when you can have a virtual-only meeting are complied with in our system.

We have also received a small number of reports of misconduct from the public[6] relating to insufficient notice periods being provided to shareholders prior to meetings, or meetings being switched from hybrid to virtual-only at short notice, including in circumstances where it wasn鈥檛 provided for in the constitution.听

While these reports are few in number and have not suggested widespread issues to date, I would like to remind you that 今日热门事件is monitoring these reports and NOMs and expects compliance, as a fundamental part of enabling shareholder participation.听聽

Meetings are accessible聽

The second key goal underlying a lot of these provisions is accessibility.听This should not be misinterpreted as meaning that meetings are required to be in a certain format.听

ASIC鈥檚 approach here is technology-neutral, as it is with many areas that we regulate.听We don鈥檛 have a preference as to what format your meeting is in, as long as it meets three criteria: it is allowed by your constitution, it is properly disclosed, and it provides your shareholders with an opportunity to be heard and participate.听After that, there鈥檚 flexibility there.

Because participation is the cornerstone of corporate accountability. It is what makes the AGM a key accountability mechanism.听It鈥檚 not just an obligation, the AGM. It鈥檚 an opportunity as well.听Shareholders are not just there to listen but to be listened to. Some of the questions can really assist from both a corporate governance and reputational standpoint.听

I鈥檓 sure you鈥檝e all seen the recent ComputerShare and Georgeson AGM Intelligence report[7]. It was an interesting characterisation that the remuneration vote is no longer just about remuneration, it is an annual referendum on company sentiment. That鈥檚 how they characterised it and that鈥檚 an interesting way of thinking about it.听I think you鈥檝e got some discussions coming up about two strikes so I won鈥檛 pre-empt those but I understand that鈥檚 an important part of the meeting as well.

Industry development of best practice鈥痝uidelines聽

So we can look at the statutory provisions 鈥� that鈥檚 what we鈥檙e really clearly focused on 鈥� but the recommendation earlier from the Statutory Review did acknowledge that best practice guidelines can be developed by industry in a way that is really valuable and supplements anything done by the regulator or indeed in the statutory provisions themselves.

Today is a good example, talking about it and discussing options, ideas, and developments, in a way that is helpful for other colleagues in other companies. I wanted to also shout out that the idea of developing best practice guidelines was explicitly described in the Statutory Review as being really valuable.听

The value of something in that format is that it is written, developed, and informed by the experts 鈥� that鈥檚 you, in relation to what you see in practices with some of the more difficult issues.

Now I recognise that some parts of the Act are tricky 鈥� like 鈥渞easonable participation鈥�. What does that mean if the technology goes down and people get disconnected from your meeting? How long do you have to wait for them to come back in or if they can鈥檛 come back in? What do they do?

A statutory provision on reasonableness is never going to be able to give you all of the answers and I don鈥檛 think you鈥檇 want it to. The idea of that level of granularity ends up in what I was talking about earlier 鈥� incredibly complex legislative frameworks that get stale or otherwise. So I would encourage you to think through the benefits of that as supplements to what I鈥檝e been talking about. 聽

颁辞苍肠濒耻蝉颈辞苍鈥�聽

So, to conclude I just wanted to finish on the concept of trust.听聽Many of the requirements we鈥檝e spoken about today are relatively new for you but they鈥檙e also new for your shareholders. Engaging with some of the changes in technology and formats does require a certain leap of faith on their part.听

I don鈥檛 need to tell you that many retail shareholders have been attending your meetings since everything was done by post, so a lot has changed in a short period of time.听聽

We saw concerns raised through the Statutory Review process that certain stakeholders distrusted virtual-only meetings if they felt it would be denying them their ability to fully exercise their rights and hold the board and management to account.听聽

My observation on that would be that best practice does breed confidence and breed trust.听聽

So, if the medium is the message, there is great value in showing, as well as telling, your shareholders that their rights will be upheld, or even enhanced, regardless of what that format is for your meetings. Because that鈥檚 what generates trust and that鈥檚 a price we think is worth paying when it comes to good corporate governance.听聽

Thank you again to AIRA and to everybody here. I鈥檓 ready to answer questions.

[1]

[2] 今日热门事件Annual Forum 2024: Bridging generations 鈥� regulating for all Australians | ASIC

[3]

[4] 今日热门事件provides further guidance on virtual meetings for companies and registered schemes | ASIC

[5] FAQs: Virtual meetings for companies and registered schemes | ASIC

[6]

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