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Aussie super funds group finds “cracks” in proxy voting system

Research involved 23 institutional investors

The Australian Council of Superannuation Investors (ACSI), the industry body representing investors with A$350bn (€277.8bn) under management, has published research showing numerous “anomalies” in the country’s proxy voting system.

The research – Institutional Proxy Voting in Australia – surveyed 23 institutional investors with over A$180bn in equity assets under management, or around 13.6% of the market at the time. It reviewed 1,895 resolutions considered at S&P/ASX300 companies in 2011.

The research participants included 13 of Australia’s largest profit-for-members superannuation funds that are members of ACSI, together with two overseas pension funds with significant Australian equity holdings, three major Australian investment institutions outside ACSI’s membership, and five asset managers.

There were nine instances (in seven companies) where there was a “significant disparity” in voting. And ACSI says there’s probably “many further anomalies” not captured.
It all pointed to a “number of operational weaknesses” inthe systems used to cast institutional shareholders’ votes.

The study was conducted by domestic proxy firm Governance Matters, which was founded in 2011 by a group of former senior Institutional Shareholder Services (ISS) executives, including country chief Dean Paatsch.

ACSI has issued a set of recommendations on the back of the research, including the separation of the cut-off dates for voting entitlements and vote lodgment and the ability for shareholders to appoint independent scrutineers to review tight results. It also proposes that AGM resolutions should be resolved by poll and not a show of hands.

“This research will provide a much-needed evidence base to guide practical and meaningful improvements to Australia’s proxy voting system and procedures,” said ACSI’s CEO Ann Byrne.

The report comes in the context of the current Corporations and Markets Advisory Committee (CAMAC) review of Shareholder Engagement and annual general meetings. Announcement