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2010-2011-2012
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
CORPORATIONS AMENDMENT (PROXY VOTING) BILL 2012
EXPLANATORY MEMORANDUM
(Circulated by the authority of the
Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP)
Table of contents
Glossary .................................................................................................. 1
General outline and financial impact ....................................................... 3
Chapter 1 Schedule 1 -- Amendments .......................................... 5
Chapter 2 Statement of Compatibility with Human Rights .............. 7
Index ....................................................................................................... 9
Glossary
The following abbreviations and acronyms are used throughout this
explanatory memorandum.
Abbreviation Definition
AGM Annual general meeting
Corporations Act Corporations Act 2001
Bill Corporations Amendment (Proxy Voting)
Bill 2012
KMP Key management personnel
RIS Regulation Impact Statement
1
General outline and financial impact
Outline
The Bill amends the Corporations Act 2001 (the Corporations Act) to
clarify that the chair of an annual general meeting can vote undirected
proxies in a non-binding shareholder vote on remuneration where the
shareholder provides express authorisation.
Date of effect: The day after the Act receives the Royal Assent.
Financial impact: The Bill has no significant impact on Commonwealth
expenditure or revenue.
Human rights implications: This Bill does not raise any human rights
issue. See Statement of Compatibility with Human Rights -- Chapter 2,
paragraph 2.5.
Compliance cost impact: Nil.
Summary of regulation impact statement
Regulation impact on business
Impact: As this amendment is machinery in nature, a Regulation Impact
Statement is not required (Office of Best Practice Regulation Reference
2012/13835).
3
Chapter 1
Schedule 1 -- Amendments
Context of amendments
1.1 Currently, the Corporations Act 2001 (Corporations Act)
requires listed companies to prepare a remuneration report, and put the
report to a non-binding shareholder vote at the annual general meeting.
1.2 During 2011, the Government enacted reforms to prohibit key
management personnel (KMP) from voting in remuneration resolutions,
although it provided an exception where shareholders give an undirected
proxy to the chair of an annual general meeting, and the shareholder
provides their informed consent for the chair to exercise the proxy. This
exception for the chair is contained in subsection 250BD(2) of the
Corporations Act. Some confusion has arisen as to whether this exception
applies in respect of the non-binding vote required under section 250R.
Summary of new law
1.3 The new law clarifies that the chair of an annual general
meeting, who is a member of the KMP or a closely related party of a
KMP, is able to vote undirected proxies in the non-binding vote where the
shareholder provides their express authorisation for the chair to exercise
the proxy.
Comparison of key features of new law and current law
New law Current law
The new law clarifies that a chair of KMP and their closely related parties
the meeting, who is also a KMP or a are able to vote undirected proxies on
closely related party of a KMP, is remuneration related resolutions
able to vote undirected proxies in the when they are the chair of the
non-binding vote if the shareholder meeting and the shareholder has
provides express authorisation for the expressly given their informed
chair to exercise the proxy. consent, under section 250BD.
However, there is uncertainty as to
whether the exception for the chair
applies to the non-binding vote
required under section 250R.
5
Corporations Amendment (Proxy Voting) Bill 2012
Detailed explanation of new law
1.4 Under subsection 250R(4) of the Corporations Act, a KMP or
their closely related party must not cast a vote in the non-binding
resolution on the remuneration report. However, the Corporations Act
provides an exception to this requirement, under subsection 250BD(2),
where a shareholder gives an undirected proxy to the chair and the
shareholder provides their express authorisation for the chair to exercise
the proxy.
1.5 However, confusion has arisen over whether this exception
applies in respect of the non-binding vote required under section 250R,
which was silent on the exception for the chair.
1.6 For the avoidance of any doubt, the new law clarifies this issue
by stating that the chair of an annual general meeting, who is a member of
the KMP or a closely related party of the KMP, is able to vote undirected
proxies in the non-binding vote required under section 250R where the
shareholder provides express authorisation for the chair to exercise the
proxy. [Schedule 1, Item 1, subsection 250R(5)]
Application and transitional provisions
1.7 The Act commences on the day after this Act receives the Royal
Assent.
6
Chapter 2
Statement of Compatibility with Human
Rights
Prepared in accordance with Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011
Corporations Amendment (Proxy Voting) Bill 2012
2.1 This Bill is compatible with the human rights and freedoms
recognised or declared in the international instruments listed in section 3
of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 The Corporations Act 2001 (Corporations Act) requires listed
companies to prepare a remuneration report, and put the report to a
non-binding shareholder vote at the annual general meeting.
2.3 The Government has enacted reforms to prohibit key
management personnel (KMP) from voting in remuneration solutions,
although it provided an exception where shareholders give an undirected
proxy to the chair of an annual general meeting, and the exception for the
chair is contained in subsection 250BD(2) of the Corporations Act.
However, some confusion has arisen as to whether this exception applies
in respect of the non-binding vote required under section 250R.
2.4 The purpose of the Bill is to clarify that the chair of an annual
general meeting, who is a member of the KMP or a closely related party
of a KMP, is able to vote undirected proxies in the non-binding vote
where the shareholder provides their express authorisation for the chair to
exercise the proxy.
Human rights implications
2.5 This Bill does not engage any of the applicable rights or
freedoms.
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Corporations Amendment (Proxy Voting) Bill 2012
Conclusion
2.6 This Bill is compatible with human rights as it does not raise any
human rights issues.
The Hon Bernie Ripoll MP, Parliamentary Secretary to the
Treasurer
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Index
Schedule 1: Amendments
Bill reference Paragraph number
Item 1, subsection 250R(5) 1.6
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