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The Senate has moved to disallow the proposed proxy advice reforms in a move welcomed by CPA Australia.
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CPA Australia backs move to block proxy advice reforms
11 February 2022
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On Thursday (10 February), the contentious reforms to proxy advice were disallowed, following much criticism by industry groups over recent months.
The reforms proposed that advisers must have an AFS licence to provide advice to institutional shareholders, to simultaneously share corporate governance advice to shareholder clients with the companies they are providing advice on and to be independent of their institutional clients by 1 July 2022.
Independent senator Rex Patrick’s move to disallow the regulations succeeded by 29 votes to 25.
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The decision comes after Treasurer Josh Frydenberg was issued a letter by the bipartisan Senate committee that raised concerns about the December-announced regulations.
Speaking to Accountants Daily, Dr Jane Rennie, general manager of external affairs, policy and advocacy at CPA Australia, said the decision is a welcome one by the group, who made a submission flagging its concerns when the reforms were first proposed.
“We’re pleased the Senate has voted to disallow the proxy advice reforms. We opposed the reforms when they were proposed and highlighted their potential risks in a submission to Treasury,” Dr Rennie said.
“Part of our role as a professional accounting organisation is to advocate for the development of consistent, effective and proportionate regulation. In this instance, we felt it was important to take a stand against these reforms.”
Dr Rennie noted it was unclear what problems the reforms would solve or justified that there was even a problem with proxy advisers to begin with.
“We saw these reforms as a worrying incursion into the provision of confidential advice. Although aimed at proxy advisers, we felt the reforms could have broader implications for the provision of advice, including accounting advice,” she said.
“A number of the claims underpinning the reforms could equally be made to require access to other business advice provided on a confidential basis. Take, for example, an accountant who prepares a business valuation for a fund trustee. Applying the logic underpinning the proxy advice reforms, an argument could be made that the valuation report must be shared with the target company.
“Requiring proxy advisors to hand over their advice is tantamount to the compulsory acquisition of intellectual property. Proxy advisors, like accountants, provide advisory services for a fee. It’s unreasonable to require them to hand over the fruits of their labours to a third party for free.”
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