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ARTICLE · 26 SEPTEMBER 2012

‘Two strikes’ rule enters its second AGM season

Henry Davis York
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Corporations Act amendments introduced a 'twostrikes' rule for the adoption of remuneration reports by listed companies.

AustraliaCorporate/Commercial Law

By James Lonie, Partner; Christina Seppelt, Special Counsel;Sunil Patel, Partner;Robert Tracy, Partner and Glenn Hughes, Partner

The 'two-strikes' rule is entering its second AGM season. Should listed companies, particularly those who received a 'first strike' in 2011, be looking carefully at their remuneration framework and shareholder engagement to avoid the risk of a board spill?

Background

In 2011 the Corporations Act 2001 (Cth) was amended to introduce a 'twostrikes' rule for the adoption of remuneration reports by listed companies. The 'two-strikes' rule gives shareholders the right to vote to spill a board of directors, if 25% or more votes cast are against adopting the company's remuneration report at two successive AGMs.

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