(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)


MELBOURNE  - Australian companies have been given more padding against cranky investors. Just before Christmas, the federal government foisted new rules on firms like Glass Lewis and the Australian Council of Superannuation Investors that offer shareholders voting advice. At first glance, they appear to improve transparency. On second, they’re too one-sided.

Treasurer Josh Frydenberg’s agency first floated proposed modifications last April. The government argued the four major proxy advisory firms in Australia require more oversight because they exert outsized influence on voting decisions, even though the Australian Securities and Investments Commission in 2017 determined existing rules were sufficient.

Standard procedure would be to invite industry comment, make adjustments and then pass legislation. Frydenberg skipped the last part and rammed through the package, which includes making proxy firms reapply for their licences.

One of the worst of the initial suggestions was dumped, at least: proxy advisers will not be required to provide their research to the affected company five days before releasing it to investor clients, which would have tipped the balance too far. Instead, investors and management will get research at the same time. Pension funds also must disclose how they vote at annual meetings, although that’s only applicable to so-called superannuation funds, which handle money employers set aside for staff retirement.

In fact, this section of the industry, which manages A$3.4 trillion ($2.5 trillion), seems to be the actual target of Frydenberg’s push. The ruling right-wing coalition has never been a fan of the superannuation sector, which was set up by the left-leaning Labor Party. Before the new rules, some 36 superannuation funds had stakes in the ASCI, which few saw as a problem. It looks like they will now have to divest.

There are also worthwhile changes missing. For example, it is all but impossible for agitating shareholders in Australian companies to launch their own resolutions. The workaround, such as it is, requires 75% of fellow owners to vote to amend the company’s constitution to allow them. No such measure has ever passed without the target’s support.

On balance, shareholders in publicly traded businesses Down Under are starting 2022 on the back foot.

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

(Editing by Pete Sweeney and Katrina Hamlin) ((For previous columns by the author, Reuters customers can click on CURRIE/ SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS https://bit.ly/BVsubscribe | antony.currie@thomsonreuters.com; Reuters Messaging: antony.currie.thomsonreuters.com@reuters.net))