More Kiwi firms line up to get their Aussie exchange coat

Friday 26th April 2002

The past two weeks have seen more strange happenings in public companies and markets and a new twist on New Zealand-Australia relationships.

Proponents of the idea that cool, informed people operate rational investment markets were further discredited last week when short-term panic affected international equities after a light aircraft hit Milan's Pirelli tower.

The initial panic reaction was reversed when Italian authorities said the crash was an accident, a point operators could have checked before dumping shares.

More examples of bloody- minded shareholder behaviour surfaced at Australian company meetings.

Enquiries made to Australian companies when I was preparing this column failed to elicit reasons for constant opposition to every resolution put to a meeting, from acceptance of the annual report and the auditor's report to re-election of directors.

Examples last week involved Capral Aluminium, the two Rio Tinto companies and Santos.

An Australian executive suggested democracy allowed people to oppose as well as approve and opposition votes were usually a minute proportion of the total.

The latter comment was valid but some shareholders were against everything, raising again the question why they wanted to hold shares in the companies.

It was probably a coincidence that the three companies involved last week were engaged in mining activities, because similar opposition has been expressed in many non-mining groups.

There has often been little obvious logic behind the mavericks' actions.

There were 3.53 million votes against receipt of reports and financial statements at the Rio Tinto meetings, for example, and 672.88 million in favour.

People opposing receipt of financial statements may have the idea that something was wrong in a company's accounting operations and its auditor's actions.

That would be a serious accusation but unlikely to be taken seriously, given the majorities usually in favour of receipt.

A resolution for reappointing Rio Tinto plc's auditors attracted 670.73 million votes for and 8.31 million against.

There were six resolutions regarding election or re-election of directors.

Each was opposed, with the "no" votes ranging from 1.73 million to 10.34 million.

All the directors concerned were elected/re-elected, with favourable votes from 638.94 million to 677.18 million.

A resolution about directors' fees saw 1.22 million votes recorded against but 676.57 million in favour.

Back in New Zealand, there were more examples of the Stock Exchange's regular questioning of companies about apparent unusual movements in their share prices.

The exchange writes to companies asking them to disclose any information that could explain the changes and if they knew any other reason for them.

Substantial price changes on relatively high turnover compared with recent trading are legitimate, and obvious, reasons for queries but big percentage movements can result from differences of only a few cents.

A 3c increase from 5c to 8c, for example, would be a 60% movement and could relate to anything.

Companies usually reply with standard answers, saying they do not know why the movement happened and there is no current information unavailable to the market.

At least that is on the record for reference if anything comes to light later.

It may be difficult to devise a special system for shares with a very low base price without affecting the overall operation of the exchange's watchdog role but it could be worth having another look.

The number of New Zealand companies reacting to new Australian Stock Exchange listing rules continued to increase last week.

That was not unusual, because the amendments to Australia's "foreign empty entitles" rules take effect on July 1.

Some companies decided to seek full listing in Australia and others to delist.

The New Zealand Stock Exchange was unhappy about a comment from its Australian counterpart that the rule changes were decided after extensive consultation.

New Zealand exchange managing director Bill Foster issued a statement on April 11 saying Australia had not consulted with his organisation "nor, other than in relation to implementation of its policy, with the companies affected."

The NZSE told Australia in March "It is the firm view of NZSE that none of the reasons advanced by ASX provide any credible justification for the proposed changes."

Comments from our readers

No comments yet