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Has ASIC Finally Caught Up With Gerry Harvey

Harvey Norman Chairman Gerry Harvey, who is famed for telling the Australian Shareholders Association to “Piss Off”, when asked tough questions at one of the retailers Annual General Meetings is facing new problems if he does it again during COVID lockdowns.

The big CE and appliance retailers who many believe have a lot of questions to answer could now fall foul of disclosure rules after Australia’s corporate regulator put companies on notice about ensuring investors can still ask questions verbally to directors as this year’s AGM season begins in earnest.

Covid-19 has relegated AGMs from hotel ballrooms and plush offices to Zoom and other virtual realms, after Treasurer Josh Frydenberg granted companies relief at the onset of the pandemic.

The Australian newspaper said that Mr Frydenberg has extended this relief until next March – and some companies have sought to change their constitutions in favour of online gatherings – an amendment to Treasury Laws passed in August means companies must still give shareholders the right to ask questions verbally at AGMs rather than in writing.

For years Harvey Norman has ducked questions about their breakdown of sales such as CE gear Vs appliances or CE Vs bedding and furniture.

The categories where profits from are important especially during COVID when supply of technology components are in short supply.

The Australian Securities and Investments Commission has warned it will be looking out to ensure shareholder rights are upheld as Australia’s biggest listed companies such as JB Hi Fi, Myer and Harvey Norman host their annual meetings in coming weeks, along with Telstra who host their meeting this week.

“ASIC expects companies to comply with all of their AGM obligations. We monitor compliance and will take appropriate action as required,” an ASIC spokesman said.

The warning comes after many companies, took written questions from shareholders at virtual AGMs last year, raising concerns from investors about boards vetting and potentially silencing prickly questions such as the call for independent directors to be ap[pointed to Harvey Norman.

Australian Council of Superannuation Investors CEO Louise Davidson told the Australian that since the Covid-19 pandemic began many companies had sought to amend their constitutions to make virtual AGMs “business and usual”, which was a concern given the potential to cloud transparency.

“The ability for shareholders to ask questions of companies at AGMs is a fundamental shareholder right,” Ms Davidson said.

“The law ensures that shareholders have the right to speak and ask questions during AGMs. We will be monitoring how companies facilitate this during the upcoming AGM season.

“Virtual AGMs are a necessity during the pandemic. However, virtual only meetings can lack transparency and accountability and should not become ‘business as usual’. On this basis, over the last year, we have seen examples of amendments to company constitutions failing to receive investor support.”

Chep pallet maker Brambles whose products are extensively used by the CE and appliance industry, was one company to scrap such an amendment to its constitution following “reservations” about virtual AGMs.

In a statement to the ASX on Friday, Brambles said it last updated its constitution 11 years ago and had hoped to amend it to reflect the increase take-up of virtual technology.

Brambles CFO Nessa O Sullivan appears to have become a perpetual objector in Mosman when it comes to new buildings and upgrades of existing properties if her submissions to Mosman Council during COVID lockdowns are anything to go by. This is despite the fact that she now lives in London.

“It was proposed to amend it to reflect certain changes to corporate governance practice, the Corporations Act and ASX Listing Rules, and to update certain legacy provisions and outdated terminology,” Brambles company secretary Robert Gerrard said.

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