New proxy adviser regulation overturned by Australian upper House of Parliament
04/02/2022
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In the dying days of 2021 Treasury released specific proxy adviser regulation along with an accompanying explanatory statement (links below).

STOP PRESS:

On 10 February 2022 the Senate has overturned Treasurer Josh Frydenberg’s controversial proxy advice regulations, just days after they came into force.

Independent Senator Rex Patrick’s move to disallow the regulations succeeded by 29 votes to 25, with the senator’s motion gaining the support of the entire crossbench, including One Nation.

The proposed regulation had been the subject of much candid feedback and criticism, including from the Government Department of Prime Minister and Cabinet’s Office of Best Practice Regulation.

From 7th February 2022 all proxy advisers would have been required to:

a. hold an Australian Financial Services Licence; and

b. disclose recommendations to companies on the same day as clients.

Issuers will have been asked by proxy advisors to provide contact emails for complying with (b) above.

From 1 July 2022 all proxy advisers would have been required to be independent of clients. Investors which received proxy advice could not have owned a proxy adviser from whom proxy advice is received.

The Senate outcome on 10 February has seen a reprieve for ACSI.

Positive aspects of the regulation such the requirement for a superannuation fund (RSE) to disclose how voting rights have been exercised i.e. what was their vote and whether and they had received proxy advice and the source, are no longer in force.

Our 2021 newsletter article commenting on the proposed regulation can be found HERE, and our submission in response see HERE.

The final regulation and explanatory statement can be found HERE. However, this is not longer applicable as a result of the Senate vote.

© Guerdon Associates 2022
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