Lodge online

Register for online access

How to lodge

Download paper forms

Search all forms

Search ASIC registers

Within: 

Search financial services/credit licensees and representatives, liquidators, auditors and more

Professional registers

--------------------------------------------------

More information

Lodge online

decrease text size increase text size print page

Annual general meetings: Voting on the remuneration report resolution




There are new rules on the voting by chairpersons of undirected proxies in relation to resolutions on the remuneration report of listed companies. These new rules are in s250R of the
Corporations Act 2001 (Corporations Act), and were introduced with the enactment of the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011. The Australian Government proposes to change the law during 2011 to clarify that chairpersons are permitted to vote undirected proxies in relation to remuneration reports, if shareholders provide express authorisation for the chairperson to vote such undirected proxies.

In the interim, this information sheet provides ASIC guidance on how companies can comply with the provisions in their current form. This guidance will be particularly useful for companies with a 30 June year-end, since they will have an annual general meeting (AGM) prior to the proposed change in the rules.


What are the new restrictions?


Shareholders often appoint the chairperson of the meeting as their proxy to vote on their behalf at the AGM. The chairperson may be directed how to vote on a resolution by ticking a box next to the resolution on the proxy appointment form (commonly known as a directed proxy) or the shareholder may not specify the way the chairperson must vote (commonly known as an undirected proxy).

It is usual for the chairperson at the AGM of a listed company to be a director of the company.

Under the new rules, there is some uncertainty as to whether a chairperson whose remuneration details are included in the remuneration report is prohibited in certain instances from voting on the resolution to adopt that report.
Section 250R(4) technically prohibits the chairperson from voting undirected proxies on remuneration report resolutions. The Government proposes to amend the law to make it clear that a chairperson is permitted to vote undirected proxies that have been vested in them, provided there is express authorisation by the shareholder.

Until the law is clarified, companies need to consider how they can comply with these new provisions.


How can companies comply with the new provisions?


We encourage listed companies to carefully consider the implications of these new rules and be mindful of how they might apply to their upcoming AGM.

Companies have the option of providing that the chairperson would not vote any undirected proxies on the remuneration report resolution without otherwise changing their current processes for holding their AGMs. We would encourage companies adopting this approach to inform their shareholders of the fact that their votes will not be counted if they provide an undirected proxy on the remuneration resolution. This will help minimise the number of uncounted votes.

Companies could also consider ways in which their proxy form can be altered so that in the case of remuneration resolutions the failure to give voting instructions by ticking either a 'for' or 'against' box on the proxy appointment form will not mean that shareholder votes are undirected and therefore not be counted. We encourage listed companies to explore options that are consistent with the new provisions that would enable proxy votes to be counted on remuneration resolutions by ensuring that the proxy given is a directed proxy.

We understand a number of legal advisers are proposing as one option the inclusion of clear, prominent and express wording in the proxy form to the effect that, unless the shareholder indicates otherwise by ticking either the 'for' or 'against' box, the shareholder will be directing the chairperson to vote in accordance with the chairperson’s clearly stated voting intention. The voting intention of the chairperson would be disclosed in both the notice of meeting and proxy appointment form. We caution that companies that pursue this option should take care to give prominence to the ability of a shareholder to 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.

Alternatively, companies may suggest that their shareholders consider nominating as their proxy for the purpose of the resolution on the remuneration report, a proxy who is not a member of the company’s key management personnel. That person would be permitted to vote undirected proxies.

Finally, we will consider applications to grant relief to enable the chairperson to cast undirected proxies on a specific remuneration report resolution.


What requirements must be satisfied to obtain ASIC relief?


We have power to make a declaration that has the effect of clarifying that a chairperson of a company is able to vote certain undirected proxies on remuneration report resolutions. This is not a class order power; we can only exercise this power upon receipt of an individual application. In addition, to provide relief we must be satisfied that in doing so there will be no unfair prejudice to the interests of any member of the company.

In order for us to assess whether the test of ‘unfair prejudice’ is met, an application for relief must include:
The relief will contain requirements that the company must meet. A copy of a pro forma instrument is attached to show companies what form the relief might take.

Companies that wish to apply for relief should also refer to our policy on relief applications in Regulatory Guide 51 Applications for relief (RG 51). Companies seeking relief will need to do so in advance of the dispatch of documents to shareholders. We will need sufficient time to consider the relief application.

Applications may be submitted to:
or posted to:
The prescribed fee for lodging an application is $38.

For more information contact ASIC on 1300 300 630.


[Attachment: Section 250R Pro Forma relief]



Australian Securities and Investments Commission


Corporations Act 2001 — Subsection 250R(6) — Declaration



Enabling legislation



1. The Australian Securities and Investments Commission makes this instrument under subsection 250R(6) of the Corporations Act 2001(the Act).

Title



2. This instrument is ASIC Instrument [11/____].


Commencement



3. This instrument commences on [insert date of signing].


Declaration



4. Subsection 250R(4) of the Act does not prevent the casting of a vote, on a resolution that the remuneration report for the financial year ending on [insert date] be adopted by [insert name of company and ACN] (the company), by [insert name of the chair] (the chair).

Where this instrument applies



5. The declaration applies to the casting of a vote by the chair in the following circumstances:
(a)[insert name of the chair] has been elected, by either the directors or the members of the company, to be the chair of the AGM of the company to be held on or about [insert date];
(b)the chair has been appointed by a member of the company who is not a person mentioned in paragraph (a) or (b) of subsection 250R(4) as the member’s proxy to attend and vote for the member at the meeting in relation to the resolution;
(c)the appointment does not specify the way the chair is to vote on the resolution;
(d)the appointment expressly authorises the chair to exercise the proxy in relation to the resolution even if the chair is a member of the key management personnel details of whose remuneration is included in the remuneration report;
(e)the notice of the meeting, or a proxy form which accompanies the notice of meeting, contains a statement as to how the chair, if appointed as the member’s proxy and the appointment does not specify the way the chair is to vote on the resolution, intends to vote on the resolution.

Interpretation


6. In this instrument: key management personnel has the meaning given by AASB 124: Related Party Disclosures published by the Australian Accounting Standards Board.


Dated this [ ]

Signed by [ ]
as delegate of the Australian Securities and Investments Commission


This is Information Sheet 144 (INFO 144). Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.


decrease text size increase text size print page