Dimensional – which manages about $40 billion in Australia and New Zealand – specifically cited option 3 in the Treasury paper that would require proxy advisers to provide reports containing their research and voting recommendations to the relevant issuer before they are distributed to the proxy adviser clients.
“In view of the potential costs and delays associated with option 3, we believe that requiring proxy advisers to provide their reports to issuers before distributing them to their clients is unnecessary, because it runs the risk that proxy advisers will lose their independence, is likely to increase costs for proxy advisers and their clients, and would cause undue delays in proxy adviser clients receiving reports that could have very negative potential consequences,” Dimensional’s submission read.
“Our view is that requiring proxy advisers to distribute their research and voting recommendations to issuers in advance of publication to clients is unnecessary.
“In our experience, the data we have received from the multiple proxy advisers we use has been high quality, and generally, we have not observed material errors in the proxy analysis we have received.
“Further, we believe an important reason to use research from proxy advisers is that they are independent from influence of the issuers that they are reporting on. Requiring proxy advisers to provide reports to the relevant issuer before they are distributed to clients creates the risk that proxy advisers may lose this independence.”
Dimensional’s submission also listed a number of recommendations, including providing issuers an opportunity to review and respond to the report after it is made available to clients.
The submission comes just weeks after Labor slammed the reforms, with shadow financial services minister Stephen Jones saying they were symptomatic of the “dangerous trends emerging from the government towards secrecy and against transparency that can be seen across a range of different corporate reforms”.
