Filing a shareholder proposal in Australia

• Corporation Act 2001 section 249
• Australian Securities Exchange (ASX) Listing Rules 

In principle shareholders are permitted, under section 249N of the Corporations Act 2001, to “give notice of a resolution they propose to move at a general meeting” if the ownership threshold is met.  

However, the courts define a shareholder resolution as a binding ‘decision’ of the company and as a result, Australian law does not permit shareholders to propose either a non-binding advisory resolution or to allow a shareholder vote to express an opinion, except in relation to the remuneration report.^[1] This legal position makes it difficult for shareholders to hold public companies to account on some important issues or seek further transparency from the company (e.g., in relation to how a company is managing ESG risks).^[2]

However, there is an accepted work-around in place (see below). 

A shareholder resolution is defined as a decision of the company. So, a resolution must be a decision that the law will allow shareholders to make, considering the Corporations Act 2001, the Australia Securities Exchange (ASX) Listing Rules and a company’s constitution. 

Shareholders cannot ‘usurp the powers’ of directors or propose non-binding advisory resolutions and so must propose a constitutional amendment to raise an issue. 

Current accepted practice is a double-barrel approach, which means that proponents file a special binding resolution seeking to amend the articles and, at the same time, an advisory ordinary resolution on the ESG issue (a ‘conditional resolution’). 

The former typically receives low support (5-10%), but this process allows an issue to be raised to the board via an advisory vote. 

Example: ACCR Shareholder Resolutions to Rio Tinto on climate-related lobbying

5% of the votes in the company or at least 100 shareholders entitled to vote at a general meeting.^[3]

There is no minimum holding period, or non-minimum qualifying period. However, the percentage of votes that members have is worked out as of the midnight before the members give a company notice (of a resolution that they propose to move at a general meeting). This means that the percentage of votes that members hold must meet the threshold requirements on this date (only) for the resolution to be considered.^[4]  

Shares held in direct ownership are demonstrated through the ASX Share Registry or, in the case of advocacy organisations that aggregate 100 shareholders, an agency agreement.^[5]

The proposal documents should be presented to the company at the registered address in written form (English language) and be signed by the members proposing to move the resolution. Electronic format is not accepted. 

The submission must contain the draft resolution, any supporting statement (1,000-word limit) and proof of ownership. 

The request must be received by the company at least two months before the date of the AGM.^[6]

The company must announce receipt of a shareholder resolution via a securities announcement. 

If a company agrees to place a resolution on the ballot, the directors may include explanatory statements and recommendations prior to providing the notice to all members. 

There is no regulatory appeal process. 

Companies can reject a proposal if it: 

• exceeds a 1,000-word limit; 
• is defamatory; or 
• is not received in time to be sent out with the notice of meeting.
   

The Australian courts can challenge and reject any proposed resolutions that are not lawful (but this is rare).  

Yes. There are no restrictions with regards to filing another proposal in subsequent years if a resolution fails to pass or meet a certain voting threshold. 

Yes. Withdrawal is quite common with companies and proponents agreeing a route of action. 

Filing proponents are not required to attend the AGM. However, it is a useful tactic to attend and request permission to provide a short representation of the resolution as this allows proponents to speak directly to the board. 

An ordinary resolution must be passed by a majority (normally, more than 50%) of the votes cast by members entitled to vote on the resolution and who vote at the meeting in person or by proxy. 

A special resolution must be passed by at least 75% of the votes cast by members entitled to vote on the resolution and who vote at the meeting in person or by proxy.  

• Australian Securities and Investments Commission, Passing a company resolution
• Australian Council of Superannuation Investors (2022), Shareholder resolutions in Australia
• Australian Shareholders’ Association (2019), Advisory shareholder resolutions
• Lexology (2018), Shareholder rights and powers in Australia