CSA Targets Proxies

The Chartered Secretaries of Australia (CSA) has called for a reform of the proxy voting system that would see more power placed directly in the hands of shareholders at company annual general meetings (AGMs). In a discussion paper, Expressing the voice of shareholders '” A move to direct voting, the CSA says the current system of proxy voting is outdated and open to manipulation.

Proxy voting is the only way that shareholders not present at an AGM can have a say. But importantly, proxy voting is not simply casting your vote in absence; the shareholder actually transfers their votes to a third party who can vote any way they choose.

Arguments for changes to the AGM in favour of both shareholders and board members are frequently trotted out with little effect. In this case, however, the CSA is the peak professional body for Australia’s company secretaries '” and there is a company secretary on the board of every company across Australia.

The CSA says there are several ways proxy voting can be exploited: those charged with submitting a proxy vote can choose to vote contrary to the shareholder’s wishes; they can choose to abstain from voting entirely; or they can “cherry pick” those votes that are aligned with their own interests and conveniently forget to place those that don’t.

The well-publicised examples, such as Nick Whitlam’s failure to sign the votes of 3973 proxies at one NRMA AGM and Solomon Lew’s late submission of 117 million votes at a Coles Myer AGM, are practical examples of how the proxy voting system fails us all.

The CSA wants a system of direct voting, as opposed to non-direct voting. It is campaigning for a system much like absentee voting in a government elections '” one that removes the need for intermediaries and allows the shareholder to cast a vote by mail, online or by phone. A move to direct voting would not require any legislative changes.

The CSA describes proxy voting as an antiquated hangover from the 1929 consolidation of the Companies Act, a time when shareholders were few and far between.

Now, with 55% of the Australian adult population owning shares and rural Australians just as likely to own shares as their city cousins, isn’t it about time that we encouraged greater shareholder participation and democratised the AGM?

To read the CSA's discussion paper, click here.