ASIC today published a report on proxy adviser engagement practices during the 2017 annual general meeting season. The report covers conduct observed and suggests practices that can be adopted by companies and proxy advisers to improve the way they engage.
Report 578, ASIC review of proxy adviser engagement practices (REP 578) provides an overview of ASIC's observations on:
- the engagement policies of the major proxy advisers in Australia
- 80 proxy adviser reports where an 'against' recommendation was made in relation to one or more resolutions considered at a meeting held during the 2017 annual general meeting season, and
- other information voluntarily provided by the proxy advisers on their engagement practices and activities during the 2017 annual general meeting season.
Commissioner John Price said, 'Proxy advisers play an important role in our market by assisting shareholders to make voting decisions on company resolutions. Voting is a key shareholder right which enables investors to hold boards to account. Meaningful engagement between companies and proxy advisers can assist shareholders by improving the quality of information provided to shareholders in proxy adviser reports.'
In the report, ASIC encourages:
- proxy advisers to clearly explain and make available their engagement policies and voting guidelines, endeavour to provide sufficient time for companies to respond to requests for clarification or fact-checking of reports, be transparent in their reports about engagement with companies and promptly consider feedback in relation to factual errors in their reports, and
- companies to actively seek out information about the engagement practices of proxy advisers, engage proactively with proxy advisers outside of peak periods, release notices of meeting to the market as early as possible, ensure disclosure is clear and not overly complex and continue engaging directly with investors regarding voting decisions.
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Background
In 2017, ASIC hosted a roundtable attended by proxy advisers, investor representatives and relevant industry groups to discuss the issue of engagement between proxy advisers and companies. We published the outcome of the roundtable in Report 539, ASIC regulation of corporate finance: January to June 2017. One of those outcomes was ASIC's commitment to monitor the issues raised at the roundtable during the 2017 annual general meeting season to gain further insight in relation to the engagement practices of proxy advisers.