Collective action back in focus

The global wave of shareholder activism has prompted ASIC to revise its guidance on investor engagement. The new proposed guidance, although generally supportive of investor engagement, is restrictive in practice and will potentially cause difficulties for collective action by investors in this market.

ASIC's existing policy on collective action has its genesis in the battle for control of the board of Coles Myer in 1995. The "Yannon Affair" exposed the potential for institutional investors to influence a company's governance and the lack of specific regulation around the issue.

In response to these issues, ASIC introduced the current Regulatory Guide 128 – Collective action by institutional investors (Regulatory Guide) and Class Order 00/455 – Collective action by institutional investors (Class Order).