10 August 2011
ASIC has confirmed that there is a significant problem in the new Two Strikes rule.
A legislative oversight means that chairs cannot vote undirected proxies on the remuneration report (see our Corporate Insights of 9 August).
The reasons for this are highly technical (see here for full details).
The Government is reportedly looking at a permanent legislative fix for the problem. Pending that fix, ASIC says that companies have four options when considering how to address the problem at their upcoming AGM:
ASIC admits that Parliament clearly intended that chairs could vote undirected proxies on the remuneration report. We would, therefore, expect that applications for relief will be granted fairly routinely. Nevertheless, companies should bear in mind that:
The Government has now announced its intention to rectify this problem. However, whether the changes will be in place for this year's AGM is unclear (if not simply unlikely).
In a statement issued on the afternoon of 11 August, the relevant Minister, Mr Bradbury, said that the necessary amendments would be introduced in the Spring Parliamentary sittings.
The Spring sittings begin on 16 August and may not end until 30 November. Given that timeframe, we believe that most companies will still need to consider the options detailed above.