Download new proxy advisory code seeks to resolve concerns from listed

8 May 2017
NEW PROXY ADVISORY CODE SEEKS TO RESOLVE CONCERNS
FROM LISTED COMPANIES OVER AGM VOTING REPORTS
A Draft “Code for Improving Engagement between Listed Entities and Proxy Advisers” was released today by the
Australasian Investor Relations Association (AIRA) in an initiative aimed at fostering relations in the long term and
to head off regulation. This comes ahead of a roundtable called for later this week by the Australian Securities
and Investments Commission (ASIC) to discuss possible solutions.
AIRA’s Chief Executive, Mr Ian Matheson, said today: “Our members, who are leading Australian and New
Zealand listed companies, have devised a balanced set of principles that we believe will foster effective
engagement between them and proxy advisory firms.”
“This Code of Engagement is intended to be a voluntary framework. It outlines the way in which proxy firms
should engage with listed companies, and it provides a mechanism for giving them feedback from listed
companies. It should also help to identify any systemic issues that may arise from time-to-time.”
ASIC has called industry bodies together on May 11 to discuss the issues including looking at approaches
currently being considered overseas like the voluntary one recently put in place in the UK or a regulatory model
like that in the US.
Ahead of that roundtable, Mr Matheson said that AIRA was seeking backing for its initiative from other
stakeholders’ including proxy advisers and business and investor groups.
The proposed Code is based on the principle that shareholder voting recommendations be clear, correct and
conflict free. Its adoption would signal willingness by listed companies and proxy advisers to better engage with
each other. It would also be of benefit to institutional investors, because they should receive more consistency on
the recommendations they use to base their voting at annual general meetings.
The Code covers five principles. They are that proxy research should be factually accurate and listed companies
should have an opportunity to correct factual errors; proxy firms should be adequately resourced and staffed; they
should be provided with appropriate feedback including industry benchmarking; there should be a system for
managing conflicts of interest; and proxy firms should report on compliance with the Code on a regular basis.
“One of the significant problems for proxy firms is that, just like many other financial intermediaries, they are
suffering a financial squeeze,” Mr Matheson said. “A strong push by investors into cheaper, passive managed
funds means that some asset managers are paying less for services such as proxy voting advice. That impacts
on the quality of work that advisers provide.
“At the same time, institutions, asset managers and asset owners rely on those recommendations and often
follow their advice on an ‘exceptions only’ basis. That makes them highly influential.”
End.
For more information contact:
Ian Matheson
Chief Executive Officer
T: +61 2 9872 9100
M: 0419 444 731
E: [email protected]
About AIRA
The Australasian Investor Relations Association (AIRA) was established in 2001 to advance the awareness of
and best practice in investor relations in Australia and New Zealand and thereby improve the relationship
between listed entities and the investment community. The Association's 160 corporate members now
represent over A$1.2 trillion of market capitalisation, over 80% of the total market capitalisation of companies
listed on ASX.