Investors criticise Australia's proposed proxy adviser rules

Sydney

INTERNATIONAL and local investors on Wednesday criticised Australia's plans for clamping down on proxy advisory firms, saying the proposals would lead to uninformed voting and make it harder for their own voices to be heard.

Australia's centre-right government in late April introduced the proposals targeting so-called proxy firms, firms that issue recommendations to investors on how to vote in corporate elections and cast ballots on behalf of some asset managers.

As proxy advisers have grown more influential on hot button corporate governance issues such as climate change, compensation and diversity in recent years, corporate lobbyists have pushed for greater oversight of the firms.

The Australian proposals include giving public companies five days to respond to proxy voting reports before they are made public, and requiring proxy advisory firms to register with the corporate regulator.

Pre-submitting the recommendations for review "may lead to a diminished voice for investors and less rigorous oversight of management", Bhanu Singh, a portfolio manager at the Australian unit of Dimensional Fund Advisors LP, said in a submission.

The firm had about A$23 billion (S$23.5 billion) invested in Australian listed companies and voted 2,598 distinct proposals at 517 meetings in Australia last year, it said.

Australian Council of Superannuation Investors (ACSI), which represents and issues advice on environmental, social and governance (ESG) matters to Australia's retirement fund industry - the 4th largest globally - is also opposing the proposals.

"These proposals have the clear potential to impact the independence of advice, depending on the obligations that are imposed on researchers and the veto powers that are given to companies," ACSI said in its written response on Wednesday.

Consultation on the proposed rules, which according to the government will bring Australia in line with regulations in the US, closes on Friday. REUTERS