An Empirical Study of Shareholders Rights in Australia: Theory and Practice

Shah, Syed Naveed Ul Hassan (2020) An Empirical Study of Shareholders Rights in Australia: Theory and Practice. PhD thesis, Victoria University.


Shareholders are important because they provide finance to companies by investing in the share market. Shareholder voting rights are attached to the shares. The rights are defined by a company’s constitution, shareholders agreement, the Corporations Act 2001 (Cth) and ASX Listing Rules. The exercise of the rights is significant for the growth and trustworthiness of capital markets. Previous research has focused on evaluation of the strength of shareholders rights, shareholders activism and shareholders engagement but lacked evaluation of the ways in which shareholders exercised their rights. This thesis addresses this issue. In particular, it explores shareholders economic rights, which are divided into control and decision making rights, and how shareholders exercised these rights by voting on resolutions proposed at Annual General Meetings. The aim of this study was to empirically and legally evaluate shareholders rights in practice in ASX 200 companies during 2014-2018. The research question was: To what extent do shareholders exercise their rights in Australian listed companies, and how and to what extent does shareholders engagement with a listed company impact on corporate decision makings at AGMs? The mixed-method methodology included both empirical quantitative and black-letter law research methodologies. The research included development of a data base of voting behaviour at the AGMs of 122 companies; 3382 AGMs resolutions including 3214 ordinary resolutions 168 special resolution were studied over the period of 5 years. The results showed that on average 64% shareholders exercised control and decision making rights in 2014 which increased by on average 4.0633% in 2018. Moreover, on average around 30% of shareholders have not attended AGMs and have never appointed proxies. The appointment of proxy trend consistently increased since 2014 to 2018 by on average 4.7514%. The attendance of shareholders in person was on average around 2% during 2014-2018. The top 20 shareholders hold on average 77.5865% of voting rights in 2018 which is 3.3634% higher than 2014. Further, on average 9% of top 20 shareholders have never attended AGMs and have never appointed proxies. The blockholders voting power lay between 58% and 63% during study period. The presence of top 20 shareholders and blockholders did not have any significant influence on the voting turnouts at AGMs. The financial benefits from the issue of dividends did not have any impact on shareholders engagement and AGMs voting turnout. The relationships of shareholders engagement with election and re-election of directors were statistically significant with shareholders voting against resolutions, but the results confirm that shareholders cannot hold directors accountable at AGMs through their voting powers. The current study supports the application of stewardship theory instead of agency theory at AGMs of ASX 200. The policy recommendations were developed on the basis of empirical confirmations established from this study. In Australia, shareholders are powerful in theory and powerless in practice.

Item type Thesis (PhD thesis)
Subjects Historical > FOR Classification > 1503 Business and Management
Historical > FOR Classification > 1801 Law
Current > Division/Research > College of Law and Justice
Keywords shareholders; rights; economic rights; Australia; annual general meetings; ASX 200; corporate decision making; voting; proxy voting; agency tTheory; stewardship theory
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