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We're joined by Mark Malinas, who is a Partner and a Co-head of the Private Equity Team at Allens, Mark thanks for speaking with me.
Thank you Kate.
Now Mark it's expected that the Federal Government will scrap the 100 member Rule as part of its drive to reduce red tape, why would the repeal of this law be so significant?
Look I think we need to see the actual detail of the repeal, there's no Bills or no new legislation has been introduced as at today. It's not surprising though I think it follows – it follows I suppose Coalition policy and also a review by the Corporations and Markets Advisory Committee or CAMAC in 2012 which looked at this rule. Look it's significant because it takes away – it takes away I suppose a rule that's been in place for a while allowing minority shareholders or a group of a minority shareholders that may have a very, very small stake in the company from being able to request that the company convene a general meeting to consider certain issues. Taking away the Rule means that there will then need to be a threshold level of shareholding before shareholders would be able to exercise that right and at the moment that threshold is 5%.
And what would the repeal of the law mean for companies?
I think what it means is you know the fact that it would take away the right of very small shareholders to request a company convener meeting means that from a company's perspective you know it potentially takes away that annoyance factor for them and you know what they would perhaps regard as management distraction and you know they would not have to deal with the very small shareholders in a way that they may have otherwise had to in the last number of years. That said it's not to say that companies won't continue or shouldn't listen to their shareholders I think with the increase in shareholder activism I think that may not necessarily matter, what level of holding a shareholder has, but the company's – with a growing rise in activism sort of will need to increasingly listen to shareholders.
And as you mentioned Mark we are seeing an increase of shareholder activism not only in Australia but globally, what do you think the repeal would mean for shareholder activism in Australia?
Over the course of the last three years we've seen almost a doubling in shareholder activism globally, look I think this repeal may not necessarily mean too much in Australia because what we're seeing in the market is very sophisticated organisations around the world whether its hedge funds, private equity sponsors, large institutions, you know special purpose funds you know so ones recently listed on the ASX late last year, whose mandate is to engage in shareholder activism. So - And if you look at the large examples or the bigger examples of that in the market the well-known ones like Billabong, Soul Pattison and Brickworks, Echo Entertainment, Fairfax, to name a few, they've all generally involved you know a shareholder or an institution holding a significant stake in the company ie 5% or more. What the change means is that while there might be some segment of the market where companies that perhaps were requested by very small shareholders, holding very small numbers of shares to do certain things, ie call a meeting, that may be tempted, but we only need to look at what the trend happening globally in the case of you know some – you know some companies even you know an example of Microsoft where the activists there had a 1% or less than 1% holding in Microsoft but it still meant that they had coughed up significant funds and it definitely bought them a seat at the table and in that result you know yielded some outcome for the activists. So look I don't think it means too much activism in Australia.
Okay, well you mentioned at the beginning that we haven't seen any detail about what the repealed law will look like; do you know when we are likely to see any further detail?
Look there's been some speculation that the Bill will be put to the Lower House next week so I think we should be able to look at the Bill and the changes in the next week or so.
All right, Mark thanks so much for joining us.
Thanks very much Kate.