In 2004, 55% of adult Australians owned shares, 44% of these were held directly with people in regional areas just as likely to own shares as their city slicker cousins. However, the number of people actually attending a meeting has declined, yet direct investors have an increasing appetite to become involved with, and heard on, governance matters.

In fact in June 2002, the Companies and Securities Advisory Committee (CASAC) released a report raising the possibility that shareholders who were unable to physically attend a meeting could vote directly by either post or electronically rather than use a proxy. However, this discussion did not progress.

1. In your experience, do you observe that shareholders believe that, when they fill out a proxy form and it is a directed proxy, their wishes will be carried out?

Yes? 94%
No? 6%

Comment

Most shareholders think that the proxy instruction is a direct vote. Directed proxies with instructions to the chair are, in effect a direct vote.
But only on the assumption that voting occurs by a poll.
I would be surprised if it occurred to them that their wishes may not be carried out.
Instructions issued with proxy form generally refer to vote being counted in event of poll, not on show of hands.
This is a fundamental entitlement of a shareholder to be able to have their vote counted. To not carry out the instructions of a shareholder is a dereliction of duty and a gross breach of the trust placed in the party to whom the proxy is given.
This only refers to some shareholders as most know the AGM meeting process.
If it is practicable for that proxy to do so (ie to attend the meeting)

2. Do you believe that the Corporations Act should mandate that proxy holders vote all proxies as directed at all times?

Yes? 84%
No? 16%

Comment

Up to member to decide whether directed or not; may want proxy to hear debate before deciding.
This is already the case for the chair as a proxy s 250A(4)(c). For others this is problematic - the Corporations Act could not force a proxy (other than the Chair) to attend a meeting or remain at a meeting - therefore it could not force a proxy other than the chair to vote as directed at all times.

The significance of this as an issue is overstated. Whilst it was an issue in the Whitlam NRMA case, s 250A(4)(c) does now mandate the chair to vote as instructed. The residual issue is whether the failure to do so is merely a breach of s 250A(4)(c) or whether it is also a breach of the duties of a director (if the chair is a director). Given that the law will continue to evolve the duties of directors, this is better left to the courts rather than making further legislative changes.

I also do not feel that there is great value in further amendments that mandate that all other proxies should vote as instructed "at all times".
Voting should be voluntary, there is no need for compulsion (we do live in a democracy).
Better outcome if all voting were by written vote (poll).
This could be more confusing to shareholders and not improve the process.

3. Do you believe that shareholders should have the option to vote directly as well as by proxy?

Yes? 67%
No? 33%

Comment

Can’t see that shareholders would vote directly if they don’t vote presently by proxy.
This would eliminate the issue. Direct voting would be simpler and would reduce the costs of AGMs.
There seems no demand for this to occur. Perhaps in my situation where there is a shareholder with 40% ownership and our ethics are so high I have not had a position where proxy holders have voted contrary to their instructions.
Unnecessary, proxy works fine.
Particularly to overcome present difficulties being experienced with shareholders not marking the box acknowledging that the Chairman may exercise the proxy even if he has an interest in the outcome.
Shareholders, as the owners of the company, should be given every opportunity to have a voice in the overall direction and function of the company.
This could have the impact of less shareholders attending AGM's and the encouragement should be for more, not less.
Preferably have all voting done that way

4. Do you believe that direct voting would increase shareholder participation?

Yes? 40%
No? 54%
Don’t know 6%

Comment

Particularly if electronic.
It would not make a great deal of difference. Most shareholders think that they are direct voting when they complete a proxy form anyway.
Maybe…
I’m not sure that many shareholders would appreciate the difference. Mums and Dads probably wouldn’t be that interested or understand it and institutions usually vote anyway so it wouldn’t increase their participation.
Preferable that all resolutions be resolved by written vote (poll).

4a. If you do think that direct voting would increase shareholder participation, do you feel that this would have a positive impact on the governance of your organisation?

Yes? 56%
No? 35%
Don’t know 9%

Comment

It would make not make all that much difference to the governance as we strive to ensure that the governance of the organisation is in line with the shareholders’ wishes already. Probably the remuneration report would be the most contentious part where shareholders may have a different view.
Currently shareholders who wish to participate can either attend in person or send a proxy. Direct voting is simply another form of voting available to those who have made the decision to participate.
Only marginally though.
This is really a removal of a procedural anomaly - as such governance may be enhanced, if only marginally, as a result.
Greater participation by shareholders provides better accountability by the board and senior management to the ultimate owners of the company.
We already have reasonable shareholder voting and a good governance system.

5. Has there been any discussion in your organisation on the benefits or otherwise of direct voting and its impact on shareholder participation?

Yes? 6%
No? 94%

6. If direct voting by shareholders was an option, would you encourage your shareholders to participate in the governance of the company by this means?

Yes? 60%
No? 37%
Don’t know 3%

Comment

Would depend on general take-up by other listed companies but would not be pushing it.
Not sure - attitude towards retail shareholders is very different in the US where our parent company is based.
Any improvement in the ability of shareholders to participate in the governance of their company should be promoted.
The use of proxies should be sufficient.
I think it is up to individual shareholders to decide on participation. Voting is not, and should not be, mandatory.
Not sure how this could be done effectively.

6a. Again, if direct voting was an option, how would your organisation prefer shareholders to participate?

By direct voting? 31%
By proxy? 31%
Have no preference? 38%

Comment

I believe the proxy voting system works well and direct voting would not result in any improvement. If it ain’t broke don’t fix it” !!
Direct voting easier from an administrative standpoint.
Direct voting ensures the views of shareholders are represented. Appointment of a proxy does not guarantee the shareholder's vote is counted. If the vote is decided on a show of hands, the proxy holder is not obliged to vote if he is representing proxies voting both for and against the motion. If the shareholder appoints the chairman to act as his proxy and the chairman has an interest in a resolution being voted on, then, in the absence of a specific instruction on how to vote, the chairman may be unable to vote discretionary proxies.

Some parties believe that direct voting would do away with the need to hold shareholder meetings. However, as the Corporations Act requires public companies to convene an AGM each year and to table the company's financial statements at the AGM it is unlikely that direct voting will replace the need for an AGM. However, it may change the focus of an AGM from a forum to vote on resolutions to a shareholder briefing held in advance of direct voting on resolutions. In recent years, some company AGMs have been the focus of protest groups determined to disrupt the course of the meeting to draw attention to their cause. By removing the need for voting at AGMs the incentive and opportunity for protest groups to disrupt proceedings is reduced and the chairman is likely to have greater control over the meeting.

The proportion of shareholders who attend AGMs is miniscule and the number is falling. The overwhelming amount of votes exercised at AGMs are represented by institutional proxies held by the chairman of the meeting. If the voting result is, to all intents and purposes, a foregone conclusion it would make sense to eliminate lodgement of proxies in favour of lodgement of direct votes either electronically or by mail.

Direct voting on a “show of hands” on a large scale I think is unfair and unfairly weights smaller shareholders. Its ok for AGMs as those shareholders have taken the effort to get there and numerically represent a fraction of the shareholder base.
Direct voting. It would simplify the procedure and reduce costs.
Shareholders that attend AGMs would not tend to favour direct votes as it would tend to marginalise the value of the meeting - that is, the resolutions would be made prior to the meeting. However, the meeting would still be of value as a means of shareholder communication.
Easier because no ambiguity.
Voting by proxy already allows shareholders to vote on any matters in the Notice of Meeting. There is no need for any change.
Better outcome if all voting were by written vote (poll).
Proxy voting is fine if the rules for their use are tidied up to ensure that the Chairman has "the sense of the meeting".