Senate debates

Thursday, 10 February 2022


Corporations Amendment (Meetings and Documents) Bill 2021; Second Reading

4:40 pm

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

When we were debating the Corporations Amendment (Meetings and Documents) Bill 2021 late last year, I was making the point that this bill is the latest attempt to capitalise on the COVID pandemic for political purposes—in this particular case, to capitalise on the COVID pandemic for the sake of the rich and the powerful by making permanent the temporary dispensation from having to hold in-person AGMs that was previously granted to companies. Can I just be clear that the Australian Greens, as I said last year, absolutely accept that this measure was necessary during the period of extended lockdowns, and we also continue to support making permanent the capacity for companies to hold hybrid AGMs. But we do not support the provisions in this bill that would allow companies to hold wholly virtual AGMs, because annual general meetings are among the few occasions when big corporations have to account for themselves publicly. They are an opportunity for investors to scrutinise what is actually being done with their money.

The pursuit of profit under the laissez-faire, neoliberal, late-stage disaster capitalist system that we find ourselves living in relies on those who run corporations being able to abstract themselves from the human or ecological cost of their actions, and that is why the executive class finds AGMs so uncomfortable. The billionaires and their lackeys hate having to face the public, because they hate being held to account and they hate having to answer uncomfortable questions, which is precisely, of course, why companies—listed companies in particular—should be required to continue to hold in-person annual general meetings, either as standalone meetings or as hybrid virtual meetings.

Given all of the power and wealth concentrated in their hands, and given the public responsibility associated with being publicly listed, the least that the captains of industry and finance should be expected to do is to face the music once a year and allow themselves to be held to account for their actions. But this government doesn't want that, because—let's face it—this government is here for the big corporations. This government is here for the billionaires and their lackeys. This government is here for its political donors. How do we know that? Because this government takes millions of dollars in donations from the big fossil fuel companies, as, in fact, does the Australian Labor Party. That's why neither of the major parties in this place is proposing to take action on climate change anywhere near in line with what the science is telling us we need to do if we want to avoid catastrophe and calamity.

Virtual AGMs may well provide greater accessibility for a greater number of shareholders and greater public transparency at some point in the future, but the point is that right now neither the technology nor the governance arrangements are in place to ensure this. The committee inquiry into this bill heard detailed accounts of the problems with virtual AGMs conducted during the period of temporary dispensation as a result of the pandemic. The bill has, of course, failed to address the issues flagged during that inquiry, yet it has made the leap to allowing companies to hold wholly virtual AGMs. This is nothing other than a naked ploy to give corporate Australia a chance to recalibrate standards around accountability and transparency.

Let no-one make the mistake of thinking this bill exists in a vacuum—because it doesn't exist in a vacuum. It sits alongside the government's watering down of continuous disclosure laws. It sits alongside the regulations that the government attempted to put through this place to cancel the licences of proxy advisers. And can I say what a great show it was by the Senate earlier today to disallow that move by the government and disallow that naked attempt to cancel the licence of proxy advisers, who do such a great job in making sure the market can be informed by accurate information. This bill sits alongside the latest attempt to use the pandemic as cover to consolidate the power of the tycoons at the expense of mum and dad shareholders, whom the Liberal Party once made a virtue of representing.

Allowing hybrid AGMs should be the limit of current reforms. To that extent, I will move the amendment on sheet 1472 circulated in my name. This amendment would prevent listed companies from holding wholly virtual AGMs. It's been revised to align it with the amendments agreed to in the House to establish a review into these provisions of the bill. By their nature, listed companies have a public responsibility and the parliament should ensure that their AGMs are conducted in a publicly observable manner. Allowing listed companies to hold hybrid AGMs will provide an opportunity for all of the issues associated with virtual meetings to be sorted out and for there to be a real-world confirmation of their purported benefits. Until then, wholly virtual AGMs for listed companies should not be allowed and shareholders should retain the opportunity to sit in the same room as the executive and the board to bear witness to exactly what they are up to and have the capacity to hold them to account for their actions.

Photo of Kimberley KitchingKimberley Kitching (Victoria, Australian Labor Party, Deputy Manager of Opposition Business in the Senate) Share this | | Hansard source

Thank you, Senator McKim. Are you planning on moving your amendments in committee?

Photo of Nick McKimNick McKim (Tasmania, Australian Greens) Share this | | Hansard source

Yes, I am.

4:47 pm

Photo of Marielle SmithMarielle Smith (SA, Australian Labor Party) Share this | | Hansard source

I rise to make a few brief remarks about the Corporations Amendment (Meetings and Documents) Bill 2021. Whilst I support choice in the ability to hold these AGMs in a hybrid model, to have that virtual participation and that in-person participation—it was something which we saw happen during the pandemic and I note that those arrangements have been extended through this bill—when we are looking at this legislation I think it is worth reflecting on the impact the pandemic has had on people who struggle to participate virtually for reasons which are very much beyond their control. We know things like the regional divide and accessibility to high quality broadband affect people's ability to participate in person. We know that, during the pandemic, for these individuals, participation not just in AGMs but in all sorts of the key economic opportunities in life have been impacted.

Notably, the limitations of our National Broadband Network made it very difficult for people in regional areas to participate in education when education went online and very difficult to participate in virtual health when that went online during the pandemic. The pandemic has raised many questions about digital access—the need for all Australians to have access to high quality, reliable, fast broadband internet, which they do not have at the moment. In many parts of regional South Australia, many South Australians are struggling with access to internet. It is causing barriers not just socially but economically for these individuals in regional South Australia. When we're looking at issues like those contained in this bill, I would urge the Senate to consider the other ways in which we can prioritise the needs of regional Australians or those who have difficulty accessing the tools they need to participate online—whether it be in health, education or in instances like this.

There have been a lot of critical and urgent issues during the pandemic for government to deal with, but I think one of the key lessons it has shown us is that it's incredibly important for people to have access to technology and to have access to the internet, and, even when they have access, to be able to use it and to know how to use it. Many elderly Australians may be able to access broadband internet but may not be comfortable using smartphones or the other pieces of technology required to unlock its potential and its benefits. I just wanted to make that point.

I welcome the opportunity to be able to review these arrangements. I appreciate why choice would be important. But I just draw the Senate's attention to those issues, particularly for Australians in regional areas.

4:51 pm

Photo of Paul ScarrPaul Scarr (Queensland, Liberal Party) Share this | | Hansard source

[by video link] Can I first say to Senator McKim that I'm a great supporter of profit and a trenchant critic of losses. I think the pursuit of profit is quite a noble ambition, and we shouldn't disregard the point that our great enterprises across this country provide growth, jobs and opportunities for all sorts of people. I come at this from a totally different philosophical background to Senator McKim, which should surprise no-one.

Senator McKim did not refer to any of the many checks and balances that are contained in this bill, the Corporations Amendment (Meetings and Documents) Bill 2021. Let me go through some of them. There can only be a wholly virtual meeting if it is provided for in the constitution of a company. That means one of two things: that when someone becomes a shareholder of the company the constitution of the company provides for a virtual meeting; or that the constitution of a company is amended when someone is a shareholder to permit only virtual meetings. That can only occur if a special resolution is passed, and a special resolution requires at least 75 per cent of the votes cast on a resolution in favour of the amendment to the constitution. That is an extraordinarily strong check and balance. I would expect that, and I think there have been examples where, companies who have been considering amendments to their constitutions to allow for only virtual AGMs will find that many stakeholders—including those companies with large retail shareholder bases—will be against amending their constitutions, and that those amendments to the constitutions simply won't proceed. I think in many cases there will be checks and balances through the constitutions of the companies.

The second point I want to make is that the bill provides that there must be a reasonable opportunity for shareholders to participate in the annual general meetings of companies. Whilst some stakeholders have raised concerns, with some practical examples with respect to how that has worked in practice during this COVID pandemic period, most companies have worked well with their share registry service providers and others to ensure that shareholders have that reasonable opportunity to participate in AGMs where those AGMs are conducted on a virtual basis.

So we've got the check and balance in terms of the constitution; the constitution of the company must provide for virtual-only AGMs. Secondly we've got the check and balance with respect to providing a reasonable opportunity for all shareholders to participate in the AGM, to ask questions of the board and the senior executive team—as they should be entitled to in an AGM context—and also to make observations, raise concerns and raise questions of the auditor. Whoever is there at the AGM has the opportunity, through the AGM, to ask those questions and raise those concerns. That's the second check and balance. The third check and balance is there is going to be a review of this legislation and how it has worked in practice after two years. That's the third limb of the protections which are contained in this proposed amendment to the Corporations Act. When you look at those checks and balances in their totality and when you look at what has actually happened in practice over the course of the COVID pandemic and how corporate Australia has responded positively in terms of making sure that its shareholders have an opportunity to participate in annual general meetings, that should give us all a great deal of comfort.

I say in response to the comments raised by Senator Marielle Smith—and I think they were earnestly made—with respect to the participation of shareholders in a regional context: prior to companies providing hybrid AGMs, regional shareholders were even more disadvantaged because they would have had to travel large distances in order to physically participate in annual general meetings. So I think these reforms should be looked at in a global context, and it should be acknowledged that shareholders actually have more opportunity to participate in AGMs where the information technology is provided to allow them to participate in virtual AGMs. In fact, more shareholders would be able to participate than used to be the case at purely physical AGMs.

Lastly, as someone who did serve as a company secretary of an ASX-listed public company, I want to say that I think many companies—and certainly most companies in the ASX 100, which are the top-listed public companies—will recognise the benefit of having a physical AGM in addition to a virtual AGM. I can well remember during the height of the global financial crisis how much it meant to the senior executive team of the company I worked for to actually have physical AGMs where we had an opportunity to liaise with our retail shareholders who supported us through those very, very difficult times. I remember a few of my favourite retail shareholders, Albert and Sam—and I must find them, so I can convey to them that I've referred to them in this debate—and I recall some of the fine points they made at many of the AGMs that we held during those difficult times. There certainly is a place for physical AGMs, and I suspect that most companies which have large retail shareholder bases will continue to have them, but companies should have the choice. For some companies that struggle even to establish quorum at a physical AGM, giving them the power to conduct a wholly virtual AGM will actually provide a powerful driver towards achieving economy and saving costs for their shareholders. That shouldn't be forgotten either.

The other thing that shouldn't be forgotten is that this bill contains other reforms. There are very important reforms in relation to the execution of documents, so that those can be done through technology-neutral ways. There are also important reforms in relation to the conduct of polls, so that most important resolutions that are put before shareholder meetings and AGMs will have to be determined by poll. In addition to that, those shareholders who represent at least five per cent of the total shareholder base would also have the right to be able to call for the involvement of an independent expert or an independent conduct of the poll to make sure it's being done in the correct way. That is certainly a reform which is supported by the proxy advisers who Senator McKim refers to as being a positive development in terms of corporate governance practices.

This bill does more than just deal with virtual AGMs. Insofar as it deals with virtual AGMs, I provide my 100 per cent support. I think it's a welcome initiative. There are checks and balances through the constitutional provisions, through the two-year review and through the reasonable opportunity for shareholders to ask questions and make observations, but it also provides important reforms with respect to the execution of documents in a neutral technology sense and also through the conduct of polls.

With those comments, I'm very, very happy to commend this bill to the Senate.

4:59 pm

Photo of Malcolm RobertsMalcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | | Hansard source

ator ROBERTS () (): As a servant to the people of Queensland and Australia, I speak to the Corporations Amendment (Meetings and Documents) Bill 2021. The process of bringing corporate governance into the digital age has proven problematic for the Morrison-Joyce government. This was not because the issues involved in this bill were too complicated for the good folk over on the government benches. The real culprit in dragging out this issue for more than two years is the Treasury who, we know, are the real government in Australia. Once again, Treasury could not help themselves in constructing measures to serve the interests of the big end of town over the interests of everyday Australian shareholders, and they came unstuck—the Treasury came unstuck.

This is an issue that I've been trying to sort out since the first reports of the failure of virtual AGMs came into my office in October 2020. In September 2020, Treasury introduced the Corporations (Coronavirus Economic Response) Determination (No. 3) 2020. It allowed any company to run a virtual AGM, as well as providing for some measures regarding electronic filing. That determination was enthusiastically embraced by the big end of town. It proceeded to run roughshod over the entire concept of shareholder primacy and accountability.

All the usual suspects were there rorting away. Bendigo Bank limited questions to an online forum that allowed only 500 characters for a question. That's little longer than a tweet, making it almost impossible to ask a sensible question. Maybe that was their objective. Activist shareholders were excluded from the virtual meeting room by way of being sent incorrect logins for the meeting. The emergency assistance number did not answer. Bendigo Bank did write their own Dorothy Dix questions, which were not correctly referenced to a shareholder by name, of course, for obvious reasons. Were all shareholder questions asked? Who would know? There was no public transcript of the AGM made available, although a full transcript was available for a fee.

Not to be outdone, Crown casino pulled their own stunts, including changing the wording of questions that were too embarrassing for Crown. They combined the same questions from different shareholders—except they were not the same. Hard questions were grouped with a softball question, and only the softball question was asked. They would read a question but then advise that the answer would only be given in a private conversation with the shareholder. What! The meeting was then guillotined, and remote attendees were given seconds to vote, ensuring proxies decided the vote in favour of the guillotine. This sounds like Labor and the Liberals running the Senate!

The year after that AGM, Crown's operations were described by a royal commission as disgraceful, illegal, dishonest, unethical and exploitative. As a result, one of Crown's casino licences was placed under supervision, their largest shareholder was told to unload its shareholding, and at one point Crown's share price was off almost 50 per cent—people didn't trust them. Those Crown shareholders who were deliberately and systematically disenfranchised by the directors' deceit at the AGM lost money because Crown ran their AGM as a damage control exercise. That cannot happen if the shareholders are in the same room as the directors. If shareholders had been allowed to ask their hard questions, to hold the board to account, would the meltdown of Crown in the year that followed still have occurred? It's an interesting question.

That's why AGMs matter. That's why shareholder primacy matters, and accountability to shareholders above all else. Who will invest money in publicly listed companies if the directors can make a joke of the one opportunity shareholders have to control how their money is invested by their company, or, worse, if shareholders know their money is being misused and are not then given a chance to do something about it. It's disgraceful, dishonest, unethical and immoral. Treasury's attempt to relieve their big business mates of the troublesome scrutiny of these pesky shareholders who own their companies risked undermining the very concept of a publicly traded corporation.

Despite the circus that virtual AGMs became, the government enshrined the same provisions in the Treasury Laws Amendment (2021 Measures No. 1) Bill 2021, which was passed only after One Nation and others in the Senate forced the government to sunset the bill on 31 March 2022—next month. If the Corporations Amendment (Meetings and Documents) Bill 2021 is not passed in this sitting then the measures sunset and the original provisions of the Corporations Act regarding AGMs and document filing come back. This is not something One Nation wanted to see. To be fair, the government has constructed a bill which went a long way towards correcting their original skulduggery.

This is actually a well written bill, except One Nation is still concerned this bill contains the same provisions for registered corporations to hold 100 per cent virtual AGMs—entirely virtual. The Treasury tried to cover that up. The explanatory memorandum for the Corporations Amendment (Meetings and Documents) Bill 2021 includes this passage:

The Bill makes permanent changes allowing companies and registered schemes to hold hybrid meetings (which give shareholders the option of either attending in person or remotely) …

On page 18, which explains the provision for virtual AGMs, the section is headed: 'Hybrid meetings of shareholders of a company or registered scheme'. Then it says, right there, that registered companies can hold 100 per cent virtual AGMs—not hybrid, 'virtual'—in its own document! Did Treasury think no senator or stakeholder would read the bill and discover the provisions for virtual AGMs for registered corporations still lurking in there? Is this planned? Is it deliberate deceit? That's enough of the spin, enough of explanatory memorandums being written by the marketing department. How about some honesty?

In the Senate inquiry, the Property Council of Australia stated that while they supported the bill they remained concerned that, subject to a constitution change, even public corporations could vote to hold 100 per cent virtual AGMs. The Australian Shareholders' Association has called on AGMs to remain hybrid—not 100 per cent virtual—and highlighted the same failings that I raised with the Australian Securities and Investments Commission at estimates in March 2021. The submission by the Australasian Centre for Corporate Responsibility also opposed 100 per cent virtual AGMs in these terms:

The proposed amendments would permit companies to adopt virtual-only proceedings—

where their constitution allows for it—

thereby avoiding any in-person, transparent interactions with shareholders. This is not in the interests of shareholders or public companies …

  …   …   …

There is certainly no obvious case to justify allowing companies to do away with physical meetings … altogether.

One Nation agrees: We want transparency. We want accountability. We want scrutiny. The Australian Council of Superannuation Investors pointed out that some companies changed their constitutions during the pandemic to allow virtual AGMs and the wordings of those resolutions would count as a constitution change under the bill. That means that companies could run virtual AGMs straightaway with no further vote.

A second rort the Australian Council of Superannuation Investors found was in IPOs. If the initial constitution passed to create a new company included virtual AGM provisions, then those would be in place from the start, and, again, the shareholders would be disenfranchised with no opportunity to vote against virtual AGMs.

Senator McKim has submitted amendment 1472 revised, which removes the right of a listed corporation to hold a 100 per cent virtual AGM. I thank Senator McKim for proposing that amendment, and One Nation is in support.

Looking at the rest of the bill, the Corporations Amendment (Meetings and Documents) Bill 2021 enables electronic execution and witnessing of legal documents to be made permanent and consistent across Australian jurisdictions. This is not an AGM related provision. For instance, it would allow for execution and witnessing of deeds electronically. In committee, the document handling sections of this bill were supported by the Australian Small Business and Family Enterprise Ombudsman, the Australian Institute of Company Directors, CPA Australia, the Law Council and the Governance Institute of Australia amongst others.

Overall, One Nation supports this bill. However, we remind the government that we will be voting against the bill because of our principle of voting for freedom and wanting the government to restore basic freedoms to not only the people who protesting out the front here right now but people around Australia who are being penalised with inhuman, immoral and ridiculous unscientific vaccine mandates and other forms of coercion and restrictions. We will be voting against this.

5:09 pm

Photo of Jane HumeJane Hume (Victoria, Liberal Party, Minister for Superannuation, Financial Services and the Digital Economy) Share this | | Hansard source

Firstly, I'd like to thank those senators who have contributed to this debate. I'd also like to thank the Senate Economic Legislation Committee for their inquiry into and report on this bill. The Corporations Amendment (Meetings and Documents) Bill 2021 modernises the Corporations Act 2001 and the Corporations Regulations 2001 to allow for the use of technology to meet regulatory requirements.

Specifically, companies and registered schemes will be able to hold meetings physically, as a hybrid, or, if permitted by the entity's constitution, a wholly virtual meeting. Members will have the flexibility and the choice to receive documents electronically or in hard copy. Finally, the bill allows for documents to be validly executed in flexible and technology-neutral ways, including electronic or wet ink signatures.

The government will conduct a 12-month opt-in review of annual general meetings, or AGMs. The aim of the review will be to encourage companies and shareholders to engage with technology with a view to considering whether future permanent reforms are needed to further support companies to effectively use technology to engage with their members. A review of the legislation will also be conducted and tabled in parliament by the first sitting day of each house, following the 30-month period after the day the bill commences. The review will be undertaken by an expert panel, consisting of members with experience in corporate governance and the role of company directors representing the interests of shareholder rights, and experience in advocating for corporate social responsibility. These reforms will support companies and registered schemes to effectively use technology to engage with their members and provide regulatory settings to support Australia's economic recovery plan. In its report, tabled on 18 November 2021, the Senate Economics Legislation Committee recommended that the bill be passed.

I would like to address here the two other recommendations that are made in that report. The Labor senators recommended an independent review of the bill, conducted within two years of its implementation date. The bill includes a requirement to review and report on the operation of these amendments at the earliest practical time, two years after the commencement of the provisions. The Australian Greens senators recommended that the provision allowing for entities to conduct wholly virtual AGMs be opposed. The bill gives entities and members the flexibility to hold meetings in the format that best suits them. The bill allows entities to continue to hold physical meetings and makes permanent the ability to hold hybrid meetings. An entity may only hold a wholly virtual meeting if it is expressly permitted by the entity's constitution, and this gives members the right to consciously decide whether wholly virtual meetings should be permitted.

We made further amendments to the bill to ensure that, if a review is not conducted and tabled in parliament, provisions of the bill that allow for wholly virtual meetings will cease to have effect. Additionally, if there are any recommendations from the review, a written government response will be required and tabled in parliament no later than three months after the report is tabled. The bill also preserves members' rights to participate in meetings by requiring that virtual-meeting technology be reasonable and facilitate the ability of the members to ask questions and make comments both orally and in writing. For these reasons, and on and on the recommendation of the Senate Economics Legislation Committee, I commend this bill to the Senate.

Question agreed to.

Bill read a second time.