Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014and indicate that the Labor Party and I will be supporting this government legislation that amends the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. With the Minister for Small Business and the shadow Treasurer in the chamber we would be quick to acknowledge the important role that corporations play in Australian society, in the protection of the individual and the mustering together of an appropriate response to the risk that comes with business. In fact, much of the development of modern Australia can be traced back to corporations, with people pooling their money and not having an individual risk.

Corporations have evolved over time. Not everything that applies to a corporation is covered in the corporations legislation. Modern corporations are aware of their social licence. It is not something that is written in any particular section of the corporations legislation, but they must have a strong connection with their community and earn the right to carry out things that they do, whether it be the tasks they do, the products they make or sell or the role they play in the community.

Items 1, 2 and 10 of schedule 1 to this bill amend the Corporations Act to better balance the rights of shareholders to raise issues with the company and the cost to companies of being required to call and hold a general meeting. I focus particularly on this because of the point I made earlier about social licence. Obviously, shareholders of the company have the ability to give input at an annual general meeting of a corporation, and say, 'This is what we are concerned about.' But it costs money to set up an annual general meeting and to notify all the shareholders. Even in these days of electronic communications it still costs money to hold such meetings. This amendment to the Corporations Act repeals the so-called 100-member rule, which created an obligation on a corporation to hold a general meeting at the request of 100 or more shareholders. These meetings are often called for protest purposes. I am not saying that those purposes are not legitimate, but there can be significant costs that have to be met by every shareholder in the corporation, and such meetings do create a significant cost to business. These proposed changes do not remove the ability of 100 shareholders to add items to the regular, scheduled annual general meeting. Obviously, shareholders always have the right to instigate debate as an agenda item at any of these meetings. They still have a chance to have their concerns heard as an item at the annual general meeting, whether their concerns are about the financial governance of the organisation or some of the social licence matters. This legislation retains the right of 100 or more members to raise issues of concern, but without the often significant costs to shareholders of scheduling these extraordinary meetings, as exists under the current act.

The 100-member rule is not linked to having five per cent or 10 per cent of the value of a corporation, which is what happens in several countries. For example, for a significant company like Woolworths, only 100 shareholders would be required to compel the company to call an extraordinary general meeting. That is actually what happened with Woolworths when it came to debating $1 limits on its poker machines. The cost to Woolworths of notifying its shareholders of the meeting was $500,000. When it hosted the meeting the motion received only 2.5 per cent support. Perhaps it might be said that if the motion to put a $1 limit on poker machines had received 10 per cent or 50 per cent support it might have been worthwhile. Irrespective of the merits of the reason for the shareholders calling the meeting in the Woolworths example, Labor has seen that we need to be more sensible about this and not have unnecessary costs attached to corporations. The other example mentioned by the shadow minister, Bernie Ripoll was the example of the NRMA—

Mr Bowen interjecting—

Sorry, the shadow assistant—

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