In December 2017, ASX amended the voting exclusion requirements under ASX Listing Rule 14.11 and expanded the definition of ‘associate’ in ASX Listing Rule 19.12. Almost 90% of ASX listed entities are currently preparing for their AGMs and should be aware of these amendments when preparing their notice of annual general meeting. This is the first ‘AGM season’ since the introduction of the amendments.
Narrowing of the voting exclusion statement
ASX Listing Rule 14.11 now provides that ‘excluded persons’ are only excluded from voting in favour of a resolution and are now entitled to vote against the resolution.
In formulating its amendments to ASX Listing Rule 14.11, ASX previously reported that it had experienced instances where an entity structured a transaction in a way to attract a voting exclusion for persons known to be opposed to a particular transaction, therefore excluding them from voting against it. ASX has noted that the purpose of a voting exclusion is not to deny a shareholder an opportunity to vote against a transaction, but is instead to ensure that a transaction only occurs if it is approved by those that do not have a personal interest in the transaction.
Expansion of the definition of ‘associate’
The definition of associate in 19.12 has been expanded to capture entities controlled by, or through, a common individual, trust, partnership or other non-corporate entity. This widens the scope of all voting exclusions.
The original definition referred to the meaning in the Corporations Act 2001 (Cth), where it only captured bodies corporate that were controlled by a common body corporate.
Entities must include the correct voting exclusion statement in their notice of annual general meeting that reflects the recent changes. Entities should also be aware that certain individuals or other non-corporate entities may now be excluded from voting on particular resolutions and should ensure that any votes cast in favour of a resolution by these ‘excluded persons’ are disregarded.
This article was written by Andrew Shearwood, Partner, David Naoum, Special Counsel and Tanika Matic, Graduate.
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