At most Australian AGMs, voting on each resolution is normally initiated by a show of hands of the members attending the meeting. Proxies are also entitled to vote on a show of hands if they are present. However, whilst those voters present at the meeting most often comprise a small proportion of total voting capital, the outcome of their show of hands determines whether a resolution is passed.

Voting by a show of hands is a fundamentally flawed and unfair system because each person has one vote, regardless of the size of that person’s shareholding. Moreover, a show of hands ignores proxy votes prior to the meeting, unless the chairman or qualifying members (i.e. 5% of the total voting capital) call a poll if it appears in their respective opinions that a different result might be obtained on a poll.

Australian AGMs are clearly in need of a meaningful cure and mandatory poll voting is just what the doctor ordered. Poll voting would ensure all resolutions include: (i) votes cast by persons physically present at the meeting; (ii) any direct votes/proxies cast before the meeting; and (iii) online votes cast during the meeting.

The Corporations and Market Advisory Committee (“CAMAC”) has produced a discussion paper titled “The AGM and Shareholder Engagement” which highlighted that more companies are self-medicating by moving away from voting on a show of hands, and finding a healthier and more accurate voting system in the form of a poll.

CAMAC also noted that in 2011, 29 out of the top 50 ASX-listed companies carried out voting solely by poll. In one example, a company went on to state in its Notice of Meeting that voting on all matters would occur by way of a poll in order to account for the large number of proxy votes that it traditionally receives from shareholders.

To further drive the dagger into the heart of voting by show of hands the Australian Council of Superannuation Investors (“ACSI”), which represents more than 60% of the Australian not-for-profit superannuation sector, is quoted in the CAMAC paper that it views the “passing of resolutions

[by show of hands] as a fundamentally undemocratic and problematic mechanism. ACSI’s expectation is for companies to call a poll to provide transparency on the outcome of all resolutions”.

The diagnosis is clear, Australian AGMs are sick and it’s time for companies to go cold turkey. It’s time for all Australian companies to give the thumbs down to a show of hands.