Every year, Australian ASX-listed companies are required to hold an Annual General Meeting (AGM). Occasionally, various corporate initiatives may also require an Extraordinary General Meeting (EGM) of shareholders to be held.
As investor expectations continue to evolve, achieving a successful outcome at shareholder meetings often requires that ASX-listed companies manage the following key considerations.
1. Understanding the Share Register
Ahead of any shareholder meeting, understanding the composition of your share register is essential.
Under Section 672 of the Corporations Act, Australian ASX-listed companies can request disclosures from custodians of their underlying beneficial owners. Understanding who your underlying beneficial owners are allows for targeted engagement with the right investors.
This includes identifying the split between retail and institutional shareholders and understanding who is ultimately responsible for making voting decisions. Another important consideration is understanding which institutional investors outsource voting decisions to proxy advisers, such as Glass Lewis or Institutional Shareholder Services (ISS). Many institutional investors may subscribe to proxy adviser research but have final voting decisions made by their in-house stewardship team.
2. Review & Address Governance Vulnerabilities
At each AGM, in addition to shareholders getting the opportunity to consider the Company’s remuneration report, at least one Board Director will be up for re-election.
Proxy advisers and investors will consider matters such as a lack of diversity, director over-boarding, and the appropriateness of executive remuneration frameworks when making their voting recommendations or decisions on these matters.
Understanding the voting policies of your investors and the proxy advisers that influence them is, therefore, an important consideration. It helps identify governance vulnerabilities that the Board can address proactively to reduce the risk of significant shareholder dissent at the next Annual General Meeting.
3. Engage Shareholders
Engaging with all investor constituencies equips shareholders with the information they require to make an informed vote.
In the lead-up to a shareholder meeting, institutional investors often have a narrow window to vote. Monitoring votes and following up investors where required ensures that investors can have their say before the voting deadline.
Engaging retail shareholders, while often an after thought, is also important. Communicating with retail investors is an effective method of increasing voting participation which can be critical in contentious shareholder meetings.
Preparation ahead of a shareholder meeting helps ASX-listed companies avoid unexpected voting outcomes and empowers investors with the information they need to make informed voting decisions.
For further information about how PGS Advisers can support your shareholder meeting, please contact Marc Stanghieri at marc@pgsadvisory.com.au.