100-member rule passed in the Senate
Following a recommendation by the Senate Economics Legislation Committee, the bill repealing the “100-member rule” to call a general meeting has been passed in the Senate.
Officially titled the Corporations Legislation Amendment (Deregulatory and Other Measures) Bill 2014, the Governance Institute of Australia has been questioning the suitability of this Bill and advocating against it for nearly a decade. It now looks likely that the bill will be annulled. The Governance Institute has been advocating for the removal of the “100-member rule” because it leaves large organisations open to exploitation by small special interest groups.
The rule enables special interest groups of 100 or more to call an Extraordinary General Meeting (EGM) between AGMs unless the company negotiates on marginal issues that do not have majority shareholder support. This can be a very costly practice as it can cost a large, listed company many millions of dollars to hold on EGM. For example, Woolworths was forced to hold an EGM to consider a resolution on $1 limits on poker machines- at a cost of $500,000. The resolution only received support from 2.5% of shareholders.
The bill still allows for groups to requisition a general meeting, however the group must be comprised of at least 5 per cent of the votes that can be cast, ensuring that there is a level of shareholder support before costing other shareholders. It is also important to note that the bill preserves the right of 100 members to put issues on the agenda of the annual general meeting (AGM), which is an essential element of corporate governance framework.