In this update:

ASIC reports on the 2017 AGM season

New ASIC guidance on sell-side

Report 564 Annual general meeting season 2017 (REP 564) examines the voting outcomes of resolutions considered at AGMs held by ASX 200 companies in 2017 and highlights emerging corporate governance issues and trends, as well as ASIC’s good corporate governance recommendations in these areas. 

Key observations in REP 564 include:

• while there were fewer ‘strikes’ on remuneration reports, there was still a strong sense of shareholder input and engagement.  This was evident from changes to remuneration structures, increased ‘close calls’ in relation to strikes on remuneration and greater director accountability through material ‘against’ votes on directors’ elections or withdrawal of nominations.  ASIC recommends that companies adopt incentive structures which are designed to achieve long term company value, are not unnecessarily complicated and are transparent enough to allow objective performance assessment;
• proxy advisers continued to actively scrutinise governance practices and attract or generate significant media and corporate commentary.  ASIC recommends that companies seek to understand proxy adviser engagement practices and engage early and proactively with proxy advisers;
• shareholders advocated for action on specific environmental, social and governance issues such as climate risk and with a particular focus on gender diversity.  ASIC recommends that companies strive to achieve an appropriate level of board diversity (beyond gender diversity) to achieve optimal board performance; and
• while companies did adopt some strategies to enhance meaningful shareholder engagement, there was no widespread adoption of structural changes (e.g., hybrid AGMS).  ASIC recommends that companies consider enhanced use of technology and other mechanisms and adopt a poll on all resolutions as a matter of course.

  See also ASIC’s media release dated 29 January 2018. 

In Regulatory Guide 264 Sell-side research issued late last year), ASIC has tempered some of the more worrisome proposals from its draft guidance, although the introduction of more oversight and involvement by compliance teams will still create a burden for smaller research providers, and the guidance regarding interactions between research analysts and others interested in capital raisings is very prescriptive.

Read more.