Proposed new rules governing proxy advice will be a blow to shareholder rights and corporate transparency, according to the powerful Australian Council of Superannuation Investors (ACSI).
A move by Treasurer Josh Frydenberg to improve “the transparency and accountability of proxy advice” has been slammed by ACSI chief executive Louise Davidson, who said there was “no rationale” for preventing super funds from having an association with proxy advisers.
“We are struggling to see the point of this part of the proposal. It would almost certainly have the impact of increasing cost and reducing efficiency of the exercise of ownership rights,” Ms Davidson said.
“It is unclear what problems the proposed changes are seeking to address. They are unlikely to provide any benefit to ordinary superfund members and indeed may well have a detrimental impact on financial returns.”
The consultation will consider requirements for proxy advisers to obtain an AFSL, furnish the companies they are reporting on with their research and voting recommendations five days before they provide them to clients, and – if their client is a superannuation fund – to be independent from it.
“ACSI members have a significant stake in Australia’s listed markets and are committed to exercising their ownership rights to improve long-term investment outcomes for their beneficiaries,” Ms Davidson said, noting that while some of the proposed changes are aimed at increasing the transparency of stewardship activities in Australia it is already common practice for super funds to disclose their voting activities.
The Business Council of Australia has already voiced support for reforms, saying they are a “welcome step towards greater accountability”.
“Proxy advisers have a role in ensuring businesses are accountable to shareholders, but advisers must also be subject to appropriate levels of accountability given the significant influence that they now wield,” said BCA president Tim Reed.
“When proxy advisors provide advice, companies should have chance to respond and all the facts should be on the table about how decisions that impact people’s lives are made.”
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