I’ve been vocal on ABC radio in recent days ripping into the Victorian,
NSW and Federal Government for their nonsensical 10% shareholder limit
for the forthcoming float of Snowy Hydro. All such parochial
nationalism does is depress the share price and reduce the proceeds
that will go to taxpayers.

In fact, it is instructive to look at other companies over the years
which have had shareholder restrictions. Most of them were privatised
or regulated by state governments which have repeatedly sold
assets at knockdown prices and then later approved a takeover at a much
higher price.

AGL: was 5% to combat Sir Ron Brierley in 1986 when he amassed 40% but then legislative limits dropped in 2002
AMP: 5% constitutional limit for first five years as a listed company until 2003

ASX: started with a 5% limit, now 15% after change in 2000
AWB: only grain growers can vote for directors and even the non-voters are limited to 10%
Banks: general 10% limit, Treasurer can approve individual shareholder going to 15% and governor-general above that
Bankwest: restrictive articles imposed as part of privatisation
original a 5% limit, lifted to 10% and then dropped ahead of the PBL raid in 2003
Colonial: 5% limit when demutualised
Free-to-air Television networks Seven, Ten and PBL:
only 15% of voting shares can be owned offshore
John Fairfax: 25% maximum for individual direct foreign investor
Jupiters Casino:
started at 5%, lifted to 10% then taken over by Tabcorp in 2002
NSW TAB: started at 5%, lifted to 10% in 2002 then taken over by by Tabcorp in 2003 with NSW Government approval
Qantas: maximum foreign ownership 49%
Tabcorp: started with 5% limit and overall 40% foreign cap, then lifted to 10% in 2002 with no foreign limit
Telstra: maximum foreign ownership 35% and individual foreign 5%
Santos: still 15% maximum shareholder limit thanks to SA legislation dating back to Alan Bond’s raid in the late 1970s
Suncorp Metway: restrictive articles imposed as part of privatisation
St George Bank:
10% shareholder limit for first 10 years to 2002, then open to constitutional change

Senator Bill Heffernan is right to argue that the 10%
shareholder cap
will eventually come off, but his xenophobic declaration that Snowy
definitely fall into foreign hands is bunkum because it would be an
extremely brave Federal Government that granted Foreign Investment
Review Board proposal for such a move. And what foreign raider would
want all that grief anyway?

However, what on earth is wrong with the industry fund-owned Pacific
coming along and offering to buy Snowy Hydro for $4 billion a few
months after the float? All those companies listed above have traded at
lower share prices due to the various caps and the same will occur with
Snowy, meaning us taxpayers will not maximise the sale proceeds when
selling this asset.