A selection of business items from the sealed sections over the last week. Crullers reports from a fiery David Jones AGM and proposed changes to the 100 shareholders rule sparks debate.

Sealed section December 5

The media certainly built up the DJs AGM in Sydney yesterday in a big way, with most of the serious financial press and even the Daily Terror expecting some bloodletting.

There was certainly a lot of drama but Dick Warburton was comfortably returned as a director.

The AFR sent in their big guns, with one of our operatives spotting both Neil Chenoweth and Trevor Sykes in attendance. And the Fin also took the unprecedented step of posting on their website an account of the AGM “as it happened”.

Amid the shareholder anger was the odd item of levity, with one proxy holder, referring to a Fin report on the weekend, asking whether Dick Warburton was in fact a member of “the old farts’ club”.

The same shareholder also asked whether a deal had been done with the instos to return Warburton to the board if he could guarantee their preferred man as the new CEO of the company to replace Peter Wilkinson. Of course the company denied any such deal!

In reality, the shareholder anger has been bubbling for some time, with last year’s AGM a heated affair and a special meeting during the year, which was only held to vote on a capital raising, also generating its share of heat.

But Warburton got a significant kick in the backside, with 24% of the proxies voted against his re-election according to the AFR’s “as it happened” report. This is almost as bad as we can recall for an incumbent director, the only one that springs to mind as being worse was Anne Keating at IAG last year where she received a 74% “for” vote.

The only thing that will placate DJs shareholders is a significant turn around in the company’s performance, but they have been waiting for that for some time.

CRIKEY SUPPORTS THE 100 SHAREHOLDER RULE ABOLITION
Second sealed section December 3

The Greens and their fellow fairies at the bottom of the Senate Democrat garden should wake up to the fact that the only people who have ever used the 100 shareholder rule to call an EGM are the various ALP factions fighting for control of the NRMA and green groups opposing old growth logging by companies such as North and Wesfarmers.

It has never been used by genuine mums and dads investors. The cost of calling a meeting can run into the millions for companies such as the NRMA, Telstra and AMP so the bar should be raised.

However, there should be a reduction in the 100 shareholder requirement for putting up resolutions at the AGM. For instance, in America you only need $US2000 worth of shares to put up a resolution.

In Australia you have to spend several hours finding 100 shareholders.

By way of contract, you only need one shareholder to nominate you to run for a board which is why Crikey does it so often. I’d far rather put up shareholder resolutions to be debated but this is just too difficult.

As an independent running for Federal Parliament you need to find 50 people on the roll in the electorate and in running for the Victorian parliament you need just 6.

ANOTHER KICK IN THE TEETH FOR THE LITTLE GUY

Hugo Kelly begs to differ on this one:

The SMH reports on proposed changes to dump the rules allowing 100 shareholders to be able to petition a special meeting of a company:
click

Under the proposed changes, a meeting will only be allowed to be called if the shareholders own no less than 5% of the share capital in the company.

We can understand the rationale – that the current rules allow shareholders to wield power out of all proportion to their economic interest in the company – but the bar has been set way too high.

And it’s not as though the boards of companies have anything to fear from small shareholders calling special meetings.

It doesn’t happen all that often and when it does the board position almost always holds sway.

Taking the NAB as an example, it would be nigh on impossible for small shareholders to call a meeting under the 5% rule – which is exactly what the big end of town wants.

With over 1.5 billion ordinary shares on issue and the NAB currently trading at around $33, you would need to get the signatures of shareholders with around $2.5 billion worth of NAB stock to petition a meeting. Good luck!

This is yet another slap in the face for shareholder democracy. If shareholders are wasting the company’s money on calling unnecessary meetings then they ultimately pay the price for that luxury.”

ANDREW MURRAY ON THE 100 SHARE RULE
Sealed section December 4

Our favourite Democrat Senator, Andrew Murray, has responded to yesterday’s piece on the proposed abolition of the rule which allows 100 shareholders to call an EGM. He writes:

“I have discussed this matter with the Shadow Minister, Senator Conroy. He and I on behalf of our Parties hold the balance of power on this issue. Senator Conroy has agreed with me that requiring a 5% economic interest as a threshold for a company to concur in the request for a general meeting under Section 249D is setting a requirement which is too onerous.

It will deliver power back to the oligarchs.

That was the view that Labor and the Democrats took in the year 2000. At that time we both said that we recognised that there was a need for reform. We both then and subsequently asked Minister Hockey and Senator Campbell to sit down and work the best reform mechanism out with us. They have to date not bothered to consult either of us.

The requirement of 100 shareholders may well be too low but the fact is that it is only possible to point to a few examples where it might warrant a claim that shareholder rights might have been abused. North Limited and the NMRA are two examples of companies who have complained.

I will be discussing this matter further with Senator Conroy and I am hopeful that between the two of us we can come to a proposal that provides for some reform without taking away the essential power of ordinary members to requisition a general meeting.

Also see Bryan Frith’ article in The Australian.

Senator Andrew Murray

Australian Democrats Corporate Affairs Spokesperson”

CRIKEY: Whilst the pollies are reforming this law, we need to make it much easier for shareholders to get a resolution up at the AGM. In the US you only need to hold $US2000 worth of stock, which is so much easier that soliciting 100 signatures from shareholders