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Boards need to take the weight of today’s issues, not long for yesterday’s

Corporate and M&A, Shareholder Activism
Boardroom with view
Corporate and M&A partner Jonathan Wenig writes in today’s Australian newspaper that, as the end of the 2021 financial year approaches, second only to the ongoing impact of a global pandemic, the hottest topic of conversation around boardroom tables is stakeholder interests and if or how to reflect them in corporate governance.

“The overarching question for boards, which is getting more emphatic and more important every reporting season, is how to appropriately balance the significance of these considerations with competitive challenges or market expectations for short or medium-term profitability.”

Jonathan reflects on a recent Janet Albrechtsen column, which quotes former AMP chairman David Murray suggesting that it’s up to policy makers, rather than boards, to determine if the wider community genuinely expects companies to behave in a certain way, and to legislate accordingly.

“Murray bases his thesis on the premise that ‘a company is owned by its shareholders whose shares are their own private property.’” Jonathan writes. “Corporations Law 101 has no issue with it. But Murray goes on to say it would be preferable for community expectations of companies to be settled and reflected by federal parliament.

“Surely a contextual, balanced, considered judgment by directors of those matters and interests that are relevant to the specific circumstances of a company is far preferable to some blanket obligation in the Corporations Act!?”

Jonathan’s article was prepared with the assistance of law graduate Kaitlin Bakken.

To read Jonathan’s full article, click here.

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