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Howard Government forgets that small shareholders are owners too.

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Media Release

Penny Wong Labor Senator for South Australia Shadow Minister for Employment and Workforce Participation, Corporate Governance and Responsibility

Friday, June 17th

Howard Government forgets that small shareholders are owners too

The Howard Government has failed to strike the right balance between shareholder participation and the cost of that participation, Labor's Shadow Minister for Corporate Governance, Senator Penny Wong said today.

Senator Wong was delivering Labor's report into the Government's Corporations Amendment Bill No. 2 (2005) which will make the calling of extraordinary general meetings more difficult.

"Labor accepts the views put by the corporate sector that broad support should be necessary to call an extraordinary general meeting, given the costs of these meetings," Senator Wong said.

"But the Government's proposal for a flat 5 per cent threshold fails to recognise the impact on small shareholders in large companies.

"For the Commonwealth Bank or Telstra, the 5 per cent rule would mean hundreds of thousands of the smallest shareholders were required to call an extraordinary general meeting - effectively removing this avenue for participation.

Labor proposes that the 5 per cent rule operate up to a maximum threshold of 1,500 members. Additionally, each member would be required to hold a minimum marketable parcel of 100 shares.

"All shareholders should have reasonable means to hold their company boards to account. Labor's approach strikes a better balance for shareholder participation."

For mutual companies, Labor proposed the 5 per cent rule operate with a higher maximum threshold of 5000. Mutuals' specific one member, one vote circumstances warrant a higher maximum threshold as more than half the members must support a resolution for it to pass at a general meeting.

Labor also considers the Government's amendments on proxy voting are a step in the right direction, but do not go far enough.

"It is time to explore direct voting and other mechanisms to make shareholder participation more transparent."

"It is important that we review the effect of each of the government's changes on shareholder participation. Labor recommends that this occur two years from the time the legislation is introduced."

For further information: Penny Wong - 02 6277 5789 Nathan Fabian - 0412 128 486