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100 signatures rule for EGMs and other actions

The Australian Shareholders’ Association notes the government’s intention to reduce the power of retail shareholders in the calling of Extraordinary General Meetings (EGM). ASA is concerned about any reduction in shareholder rights. However, ASA will support the Government’s proposal to abolish the 100 signature rule for the calling of EGMs because of the cost involved for the calling of such meetings, especially for ASX50 companies with large numbers of retail shareholders.

However, whilst reviewing one element of the 100 signature rule, the government should also make an off-setting amendment to reduce red tape for retail shareholders by making it easier for them to propose resolutions at AGMs, the cost of which shareholders are already funding.

The US requirements are informative. A single shareholder who has held more than $US2000 worth of shares continuously for more than 12 months can put up a resolution at the AGM of all US listed companies. This is arguably too easy, so ASA believes a new 10 signature rule for AGM resolutions would be appropriate, provided each holding is a marketable parcel worth more than $500.

ASA notes that only a handful of EGMs have been successfully called over the past 20 years (refer to attached analysis). The 100 signature rule is arguably too arduous and ASA has not gathered the necessary 100 signatures for any purpose for almost a decade. ASA estimates there have been only 35 Australian listed company shareholder meetings influenced by the successful gathering of 100 signatures from shareholders over the past 25 years, with Commonwealth Bank and ANZ the latest examples. Unions, green groups, the ASA and Get-up are the only entities which have done this on multiple occasions. 

ASA continues to support any single or group of shareholders representing more than 5% of ordinary voting shares to be able to call EGMs and propose resolutions at AGMs.

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