ACCR took a legal case to put Australian shareholder rights on a par with those in the US, the UK, Canada and New Zealand. The case came about because in 2014 the Commonwealth Bank refused to put our ordinary resolutions on their AGM agenda. Instead the CBA board said that the only resolution they would put to the meeting was to change the constitution. The case is not specifically about CBA, it is about shareholder rights in Australian listed companies.
Corporations are among the most powerful institutions in the world, and their power is growing. Governments are held to account at the ballot box, but there are very limited ways that shareholders can hold corporations to account.
You can read a third party summary of how company powers are distributed here.
The case was first heard on Monday 1 June 2015. ACCR lost the original case and on 10 June 2016, ACCR was informed that we had lost our appeal in the Federal Court. This is the judgement.
ACCR argued that the ultimate rights in a company are held by shareholders. After all we/they own the companies. Because of this, ACCR argued, under Australian law properly construed, boards cannot prevent formal comment by shareholders unless shareholders expressly give away this right which they have not done. This how corporate democracy works in the USA. Hundreds of shareholder resolutions are considered each year.
Barristers for CBA argued, effectively, corporate democracy was representative democracy only, once directors are elected shareholders are mostly silenced. Changing the constitution is explicitly allowed in Australian company law but it is often not the appropriate way for shareholders to tell the company about concerns they hold on relevant long term issues.
In 2014 Commonwealth Bank (via Colonial First State its wealth management arm), voted on well over 46 shareholder resolutions at the AGM’s of companies it owned. Almost all of these resolutions were just the same type that CBA wants to stop ACCR and other shareholders moving at meetings of CBA’s own shareholders.