Update on chairperson proxy voting on remuneration reports
ASIC has acknowledged that a significant flaw exists in the new
laws governing the casting of proxies by chairpersons on
remuneration reports (see our Legal Update 7 July 2011 - 'Reform to Proxy Voting').
ASIC has confirmed that despite the blunder, it is legislature's
intention that chairpersons will be permitted to vote undirected
proxies in relation to remuneration reports provided that
shareholders provide express authorisation for the chairperson to
exercise the proxies. It is anticipated that the federal government
will introduce a bill to address the problem in the parliamentary
sittings from 16 August - 30 November; however it may be some time
before an appropriate solution is implemented.
In the interim, ASIC has issued guidance on how companies can
comply with the legislation in its current form. Companies can:
- ensure the chairperson abstains from voting undirected proxies
on the remuneration report resolution (in which case ASIC
recommends companies inform shareholders that undirected proxies
will not be voted on the remuneration report);
- alter the proxy form to include more directed proxies, such
that the failure to give voting instructions on remuneration
resolutions will not prevent votes from being counted;
- suggest to shareholders that they nominate as their proxy for
the purposes of the remuneration report a proxy who is not a member
of the company's key management personnel;
- state clearly on the proxy form that unless shareholders tick
the 'for' or 'against' box on the remuneration resolution,
shareholders will be directing the chairperson to vote in
accordance with the chairperson's stated intention - the intention
being clearly stated in both the notice of the meeting and proxy
appointment form. ASIC has cautioned that companies pursuing
this option should take care to ensure shareholders are aware that
they can appoint the chairperson as proxy with a direction to cast
the votes contrary to the chairperson's stated voting intention, or
to abstain from voting on that resolution; or
- apply to ASIC for relief regarding a specific remuneration
report resolution.
Applications for relief are made on an individual company basis
and will be granted only if ASIC is satisfied that in granting
relief there will be no unfair prejudice to the interests of any
member of the relevant company. Applications must be made
prior to the dispatch of documents to shareholders and can be in
the form provided by ASIC.
With the AGM season fast approaching, companies will need to
consider their options to help avert what may be an otherwise
preventable 'no' vote on their remuneration report. If in
doubt as to the correct procedure or if wanting to seek relief from
ASIC, we recommend contacting us as soon as possible.
Author: Lachlan Currie, Cornwall Stodart