Repeal bill passes lower house

leadshotweb 10 dec

The 100-member rule, which enables 100 shareholders to call an extraordinary general meeting (EGM), may finally be heading for extinction, following the passing of a bill to repeal the rule by the House of Representatives.

The Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014 was passed with bipartisan support from the Labor party. The bill has been referred to the Senate Economics Committee for further inquiry and report in January 2015. 

The move is a positive one for the Australian Institute of Company Directors, which has long advocated the abolition of the rule, which has been used by activist groups to pressure listed companies and promote non-business agendas.

Its removal would only affect the ability of a small group of investors to call an EGM, which can be extremely costly for companies.

It does not impact any other rights, such as the ability of 100 shareholders to put a resolution on an annual general meeting agenda, and shareholders with at least 5 per cent of votes will still be able to requisition an EGM.

Company Directors has championed the removal of the rule citing it as “an excellent example of deregulation that would allow business to operate more efficiently, without compromising the rights of shareholders”.

The legislation also included some changes to remuneration reporting, including limiting the preparation of remuneration reports to "listed disclosing entities" rather than to all “disclosing entities”.