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Thursday, 24 May 2012
Page: 5488

Mr RIPOLL (Oxley—Parliamentary Secretary to the Treasurer) (10:52): I move:

That this bill be now read a second time.

Today, I introduce a bill that will clarify a requirement in the Corporations Act 2001 relating to executive remuneration.

During 2011, the government enacted reforms to strengthen Australia's remuneration framework through the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011. As part of these reforms, key management personnel and their closely related parties were prohibited from participating in the non-binding shareholder vote on remuneration.

However, an exception was provided to allow the chair of an annual general meeting to vote undirected proxies in remuneration related resolutions where the shareholder provides informed consent for the chair to exercise the proxy. Some confusion has arisen about whether this exception applies to the non-binding vote on remuneration.

The government's intention on this matter is clearly set out in the act passed last year and its associated extrinsic material. Additionally, ASIC announced last year that if companies are concerned about this issue, they could apply to ASIC for relief. However, for the avoidance of any doubt, the amendment in this bill makes it clear that this exception also applies to the non-binding vote required under section 250R.

While it has always been the case that the chair could have voted undirected proxies where the shareholder provides informed consent, the government has made this clarification, so that no harm or cost or disruption was caused from any confusion arising from the original Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011.

There is no doubt that at no time was any company chair at risk as a result of any confusion surrounding the original amendment. However, the government has responded to and worked closely with stakeholders to ensure that this bill makes it absolutely clear that the exception allowing the chair to vote undirected proxies also applies to the non-binding vote on remuneration.

Finally, I can inform the chamber that the appropriate approval of the Ministerial Council for Corporations has been obtained as required under the Corporations Agreement.

Debate adjourned.