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Not-for-profits directors

In this time of lock-downs and social distancing, how should big public companies conduct their annual general meetings (AGMs)? Are shareholders allowed to turn up and will there be any scrutiny of the board or will directors take the opportunity to shut down debate?

There are a range of big companies with December 31 balance dates which are scheduled to hold their AGMs over the next few weeks. Indeed it started yesterday with construction giant CIMIC, the old Leighton Holdings, which webcast its 45-minute AGM from its North Sydney office.

There was one written question on gender equality submitted before the CIMIC meeting which the acting chairman duly read out. He then paused the meeting so that shareholders in attendance could write down their questions and give them to an attendant, after which the board would go into a huddle and come up with a response.

Unsurprisingly, there were no questions during the meeting, presumably because barely any shareholders turned up, although they weren’t actually banned. There was no ability to ask online questions during the gathering, either written or oral.

CIMIC is one of the most issues-rich companies on the market given controversies such as the Casey council scandal, terminated construction contracts with Transurban over the West Gate Tunnel and ongoing attempts by the Spanish parent ACS/Hochtief to increase its control over the company, which has involved buyback and creeping transactions worth more than $200 million over the past two weeks.

Sadly, none of this was canvassed yesterday.

ASIC released an update last month giving December 31 balance day companies a two-month extension until July 31 to hold their AGM whilst also encouraging the embrace of appropriate technology. The Brisbane Broncos which, bizarrely, is an NRL team trading as a public company controlled by News Corp, last week opted to delay, but most of the big players are soldiering on as follows:

Sydney Airport is the only major company scheduled to hold an AGM in April or May yet to reveal its hand.

After the disappointing effort by CIMIC yesterday — where there were heavy protests by independent shareholders against the three Spanish directors up for election but no debate or commentary about this — the pressure is on oil and gas giant Santos to deliver a more interactive gathering tomorrow.

The Santos meeting is important because it is facing some hostile shareholder resolutions on climate issues which have been unusually embraced by most of the powerful proxy advisory firms, as The Age noted earlier this week.

Indeed, the proposal for Santos for better to disclose its carbon targets is tipped to receive as much as 40% voting support.

In a positive sign, Santos released a statement on March 23 saying shareholders could no longer attend the meeting but “the live webcast will include the facility for shareholders to ask questions in relation to the business of the meeting”.

However, as explained on the Santos website, shareholders will have to pre-register and then type out their written question during the meeting. There will be no throwing to a shareholder to ask an oral question, like you could do on any conference call.

It also looks like the sponsors of the shareholder motions, including the Australasian Centre for Corporate Responsibility (ACCR), won’t be able to speak to their motions and Santos will have no obligation to read out their pre-submitted questions to the meeting or allow any follow up based on the answers provided.

Companies need to remember that S250S of the Corporations Act requires shareholders to be given a reasonable opportunity to ask questions during an AGM.

Investment banking analysts are being given regular opportunities to ask CEOs live, unscripted questions on conference calls — Transurban did one yesterday and Woodside did one last Friday, even producing this 10-page transcript of the debate.

If companies are worried about too many shareholders wanting to speak, they could just limit it to six to eight pre-registered speakers, such as the Australian Shareholders’ Association, the ACCR and a small number of shareholders who express interest and pre-register.

Companies such as Westfield owner Scentre Group have been particularly taciturn during the COVID-19 crisis, issuing very brief updates. Indeed, as this list shows, about 30 of the ASX100 companies are still yet to make any update to the ASX about the impact of the virus.

So when Scentre Group has its AGM in Sydney on April 8, it should include an ability for shareholders to ask unscripted questions over the phone to extract more information on the battles with tenants and the like.

The technology is there and the law requires it, so just do it.

Peter Fray

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