Australia’s meeting season runs from August to October, and this year has seen the local ecosystem led by custodians, registrars, CSD and industry groups, more ready than ever before to facilitate proactive engagement between issuers and institutional investors, through enhanced connectivity and collaboration.
We examine the growing benefits brought about by increasing adoption of digital proxy voting in the region.
Every AGM season, a variety of corporate governance topics are addressed by companies and their shareholders. This period always represents a busy time for proxy voters as they attend multiple shareholder meetings and cast their votes on topics such as board nominations, remuneration policies, and capital management practices.
One of the key lessons that Australia can learn from the increased use of digital voting systems in the UK and Ireland markets is the power of the network effect. As more and more companies become connected in the digital ecosystem, incremental benefits become apparent with every custodian that comes on board. Although universal adoption of digital voting systems would be the holy grail, Australia’s current antiquated and slow system could still benefit from migration to an online voting platform, such as Proxymity, which as an industry-led solution to industry challenges offers outcomes that are far more targeted than other solutions.
This adoption would have the benefits of offering increased efficiency and transparency alongside the eco-benefits of going paperless. The latter is particularly important to the Australian market, where investors have shown a keenness for increased integration of ESG. As Lysa McKenna, the CEO of Corporate Markets APAC, has commented: “Anything that promotes greater efficiency and adoption of digital transformation of technology is going to be greatly welcomed in the Australian market and no doubt globally as well.”
The road to automation
Eco-credentials are not the only issue that is pertinent to the market, with Australia facing unique proxy challenges and systemic issues which need to be addressed at a local level. One of the main concerns in the antipodean ecosystem concerns the record date, as Australia has regulated cut-offs for receipt of proxy but no regulated entitlement date.
A shift to automation offers a much more efficient outcome to issuers as having a comprehensive handle on beneficial ownership is one of the main advantages of the standardization of the announcement and voting process, which comes from a digital proxy voting system. Having an end-to-end transparent solution with less risk and a pure focus on process is one of the greatest attributes of a digital solution.
These benefits to the Australian system are not just based on successes in other territories or conjecture. Instead, we can see the tangible results that have been shown via Proxymity’s introduction to Australia, where a pilot was performed in conjunction with various collaborators. The programme consisted of five issuers undergoing a meeting alongside four asset owners on the custody client side. During the 2018 trial the issuers were using the platform to get real-time value data and reporting tools, whilst the asset owners were using it to receive announcements, instructions and conformation that their votes had been received.
The pilot was a huge success and subsequently 500 clients have used the platform for their AGMs. Feedback suggested that the reduction in time was the first obvious benefit of the digital voting solution, with notifications being given in almost real-time. Whilst the main operational benefit of the platform was said to have been surrounding the process of voting instructions and submissions of proxy votes to the issuers.
Australian regulation picks up steam
With connectivity being so critical to successful implementation, mass adoption will be the greatest benefit to the industry, with strong collaboration between multiple market participants. As Ian Matheson, CEO, AIRA notes: “The ultimate success will be down to all custodians and all issuers being involved.” The same sentiment is shared by the top custodians in Australia, as stated by Andrew Gibson, Head of DCC, AU & NZ, Citi: “Nirvana would be when all issuers and all asset owners are on the platform!”
This reaction from the market is in line with the Australian government’s stance on proxy advisor rules. The recent announcement by the federal government that they wish to regulate proxy advisers has proved controversial following on from the Treasury paper which suggests that proxy advisers should be forced to give the companies they’re reviewing five days’ notice of how they are recommending shareholders should vote.
However, this is a clear sign that transparency in the market and increased time after disclosure and before voting are being seen by the Australian government as imperative. As Ann Bowering- CEO, Issuer Services, AU & NZ, Computershare says “Proxymity really empowers the issuers with the information much earlier, which of course means that there is a chance to engage with those stakeholders.” This seems in perfect harmony with the way the wind is turning in Australia and how legislation is likely to evolve.