2019 AGM Season // We’re Here to Help

2019 AGM Season is Here

We’ve done some planning to help you and your organisation get started.

For listed organisations with a 30 June financial year end, it is undoubtedly a busy time of the year.

Over the next 3 months, Annual Reports will be collated, approved and distributed, Notices of Meeting (NOMs) and Proxy Forms will be printed and sent to securityholders, and Annual General Meetings (AGMs) conducted.

Planning and preparation for these events will certainly pay big dividends during the AGM and assist in completing planned resolutions with support of securityholders. Automic Group has a wealth of experience across Registry, Company Secretarial, Legal, Finance and Corporate Governance services.

Our reach extends to more than 450 ASX-listed organisations which provides us with a unique vantage point to cultivate insights across the whole Annual Reporting and AGM season process, and to help you plan for the busiest period of the year.

We will visit the following key points:

• AGM preparation and high level considerations
• Preparation for Corporate Governance Principle changes
• Key ASA focus areas for 2019 and our insights
• Forward thinking – utilising your AGM to best build on your business
• Our view is it is time to POLL
• Key AGM Season milestones and timings

Taking care of business

With another financial year completed, it is a timely reminder for senior management and the board of directors to reflect on:

• How the organisation’s achievements and performance should be communicated to its securityholders through its 2019 Annual Report and Annual General Meeting; and
• How the organisation can position itself for further strength in the upcoming year, which could include the adoption of a new share-option plan for its employees, or the continued refinement of its governance policies and practices. For example: do you have your Whistle-blower Policy ready yet, as per the new Whistle-blower regime?

How can we help?

Automic Group’s legal and corporate governance teams can assist with reviewing current policies and drafting new policies. Click here for more information.

Corporate Governance Principles and Recommendations

Are you fourth edition ready?

The fourth edition of the ASX Corporate Governance Council’s Principles and Recommendations (New Corporate Governance Council (CGC) Principles) was released in February 2019 and takes effect for an organisation’s full financial year commencing on or after 1 January 2020.

In order to ensure that the company’s ‘social licence to operate’ remains intact and undamaged, the boards of ASX-listed organisations will need to consider not only the interests of their securityholders, but increasingly the interests of the broader group of stakeholders. As the Corporate Governance landscape in Australia undergoes a transformative shift, the need for clear and concise advice during the reporting and AGM season will become paramount, and we are here to help.

We consider that now is the opportune time to implement ‘forward-thinking’ processes for the future.

In response to these changes, we have a new service offering within Automic Group – Automic Governance. The team is comprised of Automic Group’s lawyers from its corporate/commercial practice and governance specialists.

The scope of services provided by Automic Group Governance will grow over time, but for now there are two imminent changes for organisations to consider, namely:

1) The new Whistleblower regime; and

2) The ASX Corporate Governance Principles and Recommendations (fourth edition).

If you would like to take up the offer, please contact Automic Group.

Top 3 Resolutions and ASA focus areas for 2019

1. Re-election of Directors

ASA Focus

• At election/re-election, the NOM should include in detail skills the Director brings to the Board now, and how these skills meet the requirements of the Board in coming years. The organisation should include a statement of Director skills in the Annual Report, and on the organisations website that demonstrates the suitability of Directors for the role.
• Organisations should have an independent Chairman, a majority of independent Directors and only one Executive Director.
• Majority of the Board should be independent with gender recognition (comprising of at least 30% female Directors and at least 30% male Directors).
• Non‐executive Directors who have served 3 years on a Board should have invested 1 year’s worth of Directors’ fees in the organisation’s shares.     
• A CEO should own ordinary shares worth at least 1 year’s fixed remuneration in the company’s shares after 5 years in the role.

Our Insight

ASIC analysis suggests that securityholders typically voice their dissatisfaction with an organisation’s performance by voting against the election (or re-election) of Directors. There are ways to mitigate this by increasing securityholder engagement and ensuring that the explanatory statement for the re-election of a Director is appropriately drafted.

Increasing and maintaining the integrity of a Board’s composition (via independence, gender and skill sets) remains a key focus from various stakeholders, including the ASX Corporate Governance Council.

How can we help?

• Full service in relation to an AGM NOM, which includes drafting of all resolutions and explanatory statements
• Advice and drafting of updated policies and governance practices to comply with the New CGC Principles

2. Adoption of Remuneration Report

ASA Focus

• Increased transparency via disclosure of actual CEO and KMP take-home remuneration (i.e. net income)

Our Insight

Pre-emptive measures against a “two-strike” risk is strongly recommended. The number of actual votes cast at an AGM is surprisingly low in terms of percentage for some organisations, therefore a small swing could mean the difference between a strike or a pass for this year’s AGM.

Executive remuneration remains an area of key securityholder concern, and the Board and its management must be prepared to actively engage securityholders regarding such matters at its AGM.

How can we help?

• Securityholder vote solicitation and beneficial holder vote tracking services
• Preparation of script and Q&A for AGM
• Advice and drafting of appropriate remuneration policies and incentive schemes

3. Employee Incentive Schemes

ASA Focus

• Long-term incentive schemes should be structured to ensure that the benefits are only realised after an extended period of time of at least 4-5 years
• Market value should be used to calculate grants, not fair value

Our Insight

Closer scrutiny from securityholders and proxy advisers underlies the need to ensure that employee incentive schemes are drafted appropriately for executives and employees, as it could have significant adverse consequences in the form of strikes against remuneration reports and rejection of Director re-elections.

In addition to tax implications, depending on the type of incentive security and structure of the employee incentive scheme, it may trigger various sections of the Corporations Act 2001 (Cth), including the provision of a financial benefit to related parties, the giving of financial assistance, the taking of security over own shares, and limitation to termination payments, which all require careful navigation.

How can we help?

• Advice on legal structuring of employee incentive schemes in line with the Corporations Act 2001, ASIC disclosure requirements and ASX listing rules
• Management of schemes and co ordination of the making of offers to employees

Additional ASA focus

Securityholder participation

• Organisations should maximise securityholder information and engagement through data releases of the number of securityholders
• Voting on AGM resolutions, including a break down of for and against, as in a scheme of arrangement vote
• Participating in capital raisings including trading renounceable rights and dividend reinvestment plans

How can we help?

• RegistryPRO provides a suite of pre and post meeting reports
• Management and co ordination of capital market activities

Forward thinking

We are seeing many organisations using their AGMs to build in the flexibility they need to operate effectively both now and beyond.

To poll or not to poll?

How does your organisation determine the outcome of AGM resolutions? The days of determining the outcome of resolutions put to securityholders at a meeting by ‘a show of hands’ may be numbered.

The New CGC Principles include a recommendation that all resolutions put to shareholders at a meeting must be determined on a poll. This would be consistent with the practices of other international exchanges, and ASIC’s strong recommendation of what it considers to be good corporate governance.

For organisations that have historically not conducted a poll at their AGMs, we would strongly recommend that the Board consider implementing the process for this year’s AGM. This is a simple measure to proactively demonstrate forward thinking practices at your meeting.

How can we help?

We have conducted countless polls. We can carry out a simple and effective poll for you at your meeting, providing the results back to you through our portal at the meeting venue. You will have an instant solution without the risk and any excessive costs.

Plan to succeed

Key AGM season milestones and timings

Stage 1: Agreed AGM timetable

When: Now

Planning key steps including regulator approval (ASIC & ASX) and securityholder notifications will help you feel more in control during the busy AGM season. Let us assist you with coordination of key timetable dates and actions to make the season run smoothly.

Stage 2: ASX and ASIC approval

When: Late September/ early October (Allow 3 weeks)

The ASX and ASIC typically require 5 and 14 clear days respectively for approval of AGM documents. You will need approval from one or both regulators depending on resolutions included in your AGM NOM. Add these key dates to your AGM timetable to ensure you meet these requirements

Stage 3: Securityholder materials distribution

When: October (min of 28 clear days before AGM)

Annual Report, NOM and the proxy forms need to be printed and mailed out to securityholders who have not elected to receive these documents electronically. Notice period for ASX-listed co organisations in line with s249HA of the Corporations Act 2001 is 28 clear days (excludes day of document dispatch).

It is highly advisable to book print and mail as soon as your AGM date is known to beat the rush.

Stage 4: Proxy results monitoring

When: October/November (depending on AGM date)

To ensure the Board gains support for the planned AGM resolutions we recommend a proactive communication approach before the proxy voting opens.

Once the voting is open, we will help you monitor results and discuss strategies to maximise investor voting, and to help reach those investors who are less actively engaged or could be travelling.

Stage 5: Meeting day

When: November

The day of the meeting is here. A well-prepared Chair and Company Secretary can deal with any securityholder or visitor question with ease and confidence.

“Shareholder engagement is a cornerstone of good corporate governance”

Commissioner John Price

Ready to start planning?

Call us on 1300 288 664 or email us now.