How shareholder campaigns work on SIX
Australia’s Corporations Act grants power to shareholders of listed companies to influence a board in a number of ways: but unless you’re a particularly large investor in Australia, like a super fund or a billionaire, influencing a company as an individual is difficult.
However, when at least 100 investors work together, they have the right to give notice of a resolution to propose at a general meeting.
We only progress to shareholder resolutions as a last resort. Ideally, a company will want to avoid this by agreeing to a proposal beforehand.
How shareholder campaigns work on SIX
Australia’s Corporations Act grants power to shareholders of listed companies to influence a board in a number of ways: but unless you’re a particularly large investor in Australia, like a super fund or a billionaire, influencing a company as an individual is difficult.
However, when at least 100 investors work together, they have the right to give notice of a resolution to propose at a general meeting.
We only progress to shareholder resolutions as a last resort. Ideally, a company will want to avoid this by agreeing to a proposal beforehand.
How SIX creates change
Identify the target
SIX researches and identifies companies that need to make improvements to their environmental or social performance.
Rally the shareholders
We find at least 100 shareholdersPeople can buy shares through the SIX platform, or use shares they have purchased on a different broking platform.
Craft the proposal
Now that we’ve unlocked our shareholder power, we collaborate with investors, NGOs, and other stakeholders to agree on the proposals and demands we are making to the company.
Amplify influence
The more shareholders we sign, the more powerful our proposal. We build momentum by recruiting more shareholders, and partnering with big investors like super funds, foundations and ethical investment funds to amplify our influence.
Engage, transparently.
We seek meetings with company executives to discuss and agree to our proposals. While most company engagement is done behind closed doors, we’ll always be transparent about our dealings with companies.
AGM showdown (if needed)
If we can’t reach an agreement with the company, we can seek to make change at the company’s AGM (annual general meeting). Options include proposing a shareholder resolution to be voted on by all company shareholders, voting against the company’s remuneration report, or trying to vote in or out company directors.
How SIX creates change
Identify the target
SIX researches and identifies companies that need to make improvements to their environmental or social performance.
Rally the shareholders
We find at least 100 shareholders can buy shares through the SIX platform, or use shares they have purchased on a different broking platform.
Craft the proposal
Now that we’ve unlocked our shareholder power, we collaborate with investors, NGOs, and other stakeholders to agree on the proposals and demands we are making to the company.
Amplify influence
The more shareholders we sign, the more powerful our proposal. We build momentum by recruiting more shareholders, and partnering with big investors like super funds, foundations and ethical investment funds to amplify our influence.
Engage, transparently
We seek meetings with company executives to discuss and agree to our proposals. While most company engagement is done behind closed doors, we’ll always be transparent about our dealings with companies.
AGM showdown (if needed)
If we can’t reach an agreement with the company, we can seek to make change at the company’s AGM (annual general meeting). Options include proposing a shareholder resolution to be voted on by all company shareholders, voting against the company’s remuneration report, or trying to vote in or out company directors.
The BIG opportunity
Big companies shape the world around us and have an outsized impact on the environment and society. Currently, shareholder rights in Australia are restricted to major investors who own 5% of the votes that may be cast or groups of 100 shareholders. In contrast, the US, the UK, and Canada embrace shareholder activism, empowering individuals to voice concerns, ask questions and propose resolutions on environmental and social issues.
Why is it so hard to make change in Australia?
Individual investors in Australia don’t get the same opportunity to influence companies on environmental and social matters. NGOs rarely have the access or expertise to find 100 shareholders and file shareholder resolutions. Even big investors like super funds only count as 1 shareholder and can’t put a shareholder resolution on their own (unless they own more than 5% of the company). That’s why fewer than 10 Australian companies have received shareholder resolutions in the last 2 years. 1
In the US alone in 2023, 607 resolutions were proposed, and 341 went to a vote on environmental and social issues aimed at hundreds of different companies. These resolutions are placed by all sorts of investors - concerned individuals, wealth advisers, NGOs, and religious groups. 2
What kind of change can shareholders make?
When working together, even small shareholders can get big outcomes. This happens regularly overseas.
In the last year Apple has agreed to report on union rights and Visa has promised to provide more details about its gender and racial pay disparities. A few years ago activist fund manager Engine no.1 installed 3 new board directors at Exxon despite holding only 0.02% of the company shares. Tulipshare was able to get a 44% vote for a resolution supporting factory worker rights at Amazon, even though its supporting shareholders held just $42,000 of shares in the USD$1.6 Trillion company.
That’s all about to change. SIX is breaking down these barriers, opening up corporate Australia to a new wave of shareholder activism.
References
[1] Australian Centre for Corporate Responsibility, Santos Ltd, 2023, https://www.accr.org.au/companies/santos-ltd/
[2] S&P Global, Record number of shareholder ESG proposals in 2022 defies GOP political backlash, 2022 https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/record-number-of-shareholder-esg-proposals-in-2022-defies-gop-political-backlash-71181308
