Chapman Tripp sees more shareholder lobbying, increased accountability for listed firms

Wednesday 14th June 2017

New Zealand's listed companies are set to face a growing tide of shareholder activism and increased demands for accountability, law firm Chapman Tripp says.

In a report on corporate governance trends released today, Chapman Tripp predicts more shareholder activism will follow recent showdowns, such as the tussles over director roles at property investor NPT and high-tech components maker Rakon. Meanwhile, new audit reports on the most significant issues identified by an auditor will allow investors to make more informed questions at annual meetings, which the law firm expects will see rising attendance due to lobbying by the New Zealand Shareholders' Association to keep physical meetings in a hybrid model, while virtual meetings appeal to younger, tech-savvy investors.

Partner Roger Wallis says a growing appetite among younger New Zealanders for less capital-intensive assets, the digital-based opportunities for entrepreneurs, and expanding KiwiSaver and personal savings balances will boost people's involvement in financial markets.

"We expect market participation rates will grow over the next 20 years due to a number of factors both economic and technological," he said. "The recently updated NZX corporate government code will also be a driver for change, notably in the areas of company strategy, diversity, remuneration and environmental, economic and social reporting."

The NZX code, released last month, was the first substantial overhaul of governance rules since 2003, spanning eight principals designed to protect the interests of and build long-term value for shareholders, encompassing ethics, board make-up, board committees, reporting and disclosure, remuneration, risk management, auditors and shareholder rights.

Chapman Tripp's report shows the average board size of the top 75 listed companies was 5.8, with Fletcher Building and Heartland Bank having the biggest with nine directors. Of those firms, about three quarters had a majority of independent directors and a fifth had only independents. About 44 percent had their chief executive on the board.

The top 75 companies had 469 directors in total, of which 316 held just one directorship among those firms. Another 45 held two board roles, 13 had three, and six had four top 75 directorships. The average length of service was 5.8 years, with Hallenstein Glasson directors have the longest average tenure at 18.9 years followed by Mainfreight at 14.4 years.

(BusinessDesk)

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