Submission to Treasury - Corporations Amendment Bill 2011

18 March 2011

Mr David Bradbury MP
Parliamentary Secretary to the Treasurer
Parliament House
CANBERRA ACT 2600

Dear Mr Bradbury

Corporations Amendment Bill 2011

The Group of 100 (G100) is an organization of chief financial officers from Australia's largest business enterprises with the purpose of advancing Australia's financial competitiveness.

Thanks again for taking the time to see myself, Peter McClelland and Peter Meehan regarding some concerns we have with the introduction of this Bill. As requested, we list below what we believe to be some unintended anomalies within the Bill.

'Two-strikes' test: Transurban Limited where two 'suitors' own 25% of shares and could instigate board unrest, potentially based on non-remuneration issues.

Executives (and related parties) voting on remuneration report: It is proposed in the Bill that key management personnel (KMP) or closely related parties of KMP cannot vote their shares on the remuneration report resolution. This will mean, in practice, that all directors cannot vote their shares irrespective of whether the directors take fees or other remuneration. It is common for major shareholders to have a number of unpaid director representatives on various companies within the same group and these provisions will preclude them from voting on these resolutions which would appear an anomalous outcome. This is pertinent to Westfield Holdings, Seven Group and Consolidated Press Holdings and other entities where there is a majority shareholder and where another entity has significant influence and treats the entity as an associate for reporting purposes. Obviously, the larger the relevant parties interest in the company with a remuneration report, the greater the possibility of distortion by having the level for remuneration vote set at just 25%.

Hedging: The Bill prevents executives from hedging vested equity that is subject to restrictions on disposal. The G100, which supported banning hedging of unvested equity incentive remuneration, considers that this restriction is unnecessary.

Yours sincerely
Group of 100 Inc

Peter Lewis
National President