BCA Releases Shareholder Communication Discussion Paper

11 October 2004

The Business Council today released a discussion paper outlining a number of new approaches Australia’s listed companies might adopt to strengthen or improve their communication and interaction with shareholders.

The paper, Fresh Approaches to Communication Between Companies and Their Shareholders, was produced as a catalyst for debate for companies, shareholders and market commentators into the coming AGM season.

Developed by the BCA’s Chairmen’s Panel, the Australian Institute of Company Directors (AICD) and Chartered Secretaries Australia (CSA), the paper identifies ways companies and shareholders can strengthen or review the way they communicate and interact. The Australian Shareholders’ Association was also consulted in the development of the paper.

The paper recognises that many of the current practices such as AGMs may need to be rethought or re-energised due to the increase in the number of shareholders, the heightened level of interest in and expectation of the performance of listed companies and the advent of new information and communication technologies.

BCA President Hugh Morgan said the major challenge for listed companies was to manage their central roles and responsibilities as set down under corporate laws with the roles and expectations of shareholders, as well as the broader community.

These roles and expectations have changed considerably in recent years and continue to evolve.

Mr Morgan said as a result, most listed companies were faced with a complex balancing act of communicating effectively with shareholders as well as a range of other stakeholders with many and sometimes competing expectations, while meeting their core legal, financial and regulatory responsibilities as listed companies.

“While Australia is recognised for the discipline, transparency and financial performance of its corporate sector, the recent debate on corporate governance has meant many shareholders as well as government, regulators and other interested parties, are highly attuned to the performance and governance of companies,” he said.

“Despite regulations which sometimes detract from sensible and effective communications, listed companies are expected to clearly articulate and accurately explain their activities and strategies in a timely manner to an array of audiences.

“Therefore, communication practices need to be flexible as well as accessible while meeting the many and varied requirements for appropriate and timely disclosure.”

“In short, the pressure on listed companies to communicate effectively has grown. The approaches put forward outline a range of options available to companies that draw on best practice here and overseas.

Mr Morgan said the proposals were not prescriptive and companies need to consider possible alternatives in light of their own requirements.

The paper was developed not only for companies but also to alert shareholders, as owners, of their own roles and responsibilities in being engaged in the process of information and communication with companies.

Australian Institute of Company Directors Chief Executive Ralph Evans said: “Increased scrutiny on company performance by shareholders, the broadening of the shareholder base through compulsory superannuation schemes and the rapid uptake of electronic means of communication are all going to change the way boards talk with shareholders.

“We want to kick-start a debate with this paper on what techniques are appropriate and effective."

Mr Tim Sheehy, Chief Executive of Chartered Secretaries Australia, said companies have to come to grips with the rapidly changing communication needs of their shareholders.

“People are less interested in attending AGMs, receiving full annual reports or in many cases, receiving any annual report at all. And despite early expectations, technology is not proving to be a panacea.

“The challenge now is for companies to find new ways to communicate with their shareholders effectively. It is unlikely there will be a ‘one size fits all’ solution to effective shareholder communication," Mr Sheehy said.

The paper is particularly targeted at large listed companies, the top fifty of which account for 75 per cent of the Australian market by capitalisation. Ideas and alternatives canvassed in the paper include:

  • Reforming or reinventing the annual general meeting as the centrepiece for communications between shareholders and companies.
  • Asking shareholders in advance to table issues for discussion at annual general meetings.
  • Placing issues identified by shareholders formally on the agenda at the annual general meeting.
  • Improving the ways shareholders can initiate company meetings.
  • Holding regular ‘shareholder meetings’ to supplement annual general meetings.
  • Improving the use of proxies and how proxy votes are disclosed at annual general meetings.
  • Improving the conduct of annual general meetings and the opportunities for shareholder participation.
  • Having the heads of board committees available to present to, and answer questions from, shareholders.
  • Establishing and implementing ‘Shareholder Communications Policies’.
  • Increasing the use of electronic media in communications between companies and their shareholders.

The BCA has written to the top fifty listed companies in Australia, encouraging them to consider the suggestions outlined in the paper.

Fresh Approaches to Communication Between Companies and Their Shareholders


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2004 Media Releases

2004 Media Releases

2004 Media Releases