AIRA calls for greater institutional AGM representation

Institutional investors should have a greater role in the annual general meetings of ASX300 companies, according to new research published by the Australian Investor Relations Association (AIRA).

The research revealed that whilst retail investors' equity holdings have been in decline since 2002, institutional investors holdings have grown.

It contradicts earlier research such as the ASX Ownership Surveys in the 1990s, which laid the blame for declining retail share holdings with the Global Financial Crisis (GFC) and market restructures, and indicates a longer-term trend towards institutional ownership.

AIRA chief executive Ian Matheson said the research, which looked at data published in company annual reports provided by Morningstar, called for greater encouragement of institutional voting.

VIEW ALL

View all

"If such large percentages of most ASX300 companies are held by institutional investors, then perhaps greater encouragement should be given to them to vote, as on average only 60 per cent of the shares of those companies are voted," he said.

The percentage of issued capital held by small shareholders in the average ASX300 company decreased from 15.1 per cent in 2002 to 9.9 per cent in 2011, whilst the percentage held by institutional investors increased from 84.9 per cent to 90.1 per cent.

AIRA said institutional investors had increased their holdings even while their numbers remained on average in proportion with other shareholders.

Institutional investors had consolidated their stocks, including in the ASX20, during a period when they have been more outspoken about the management and governance of the companies into which they invest, according to AIRA.

While they held 74.8 per cent of the issued capital in the ASX20, institutions represented only 2.9 per cent of the total number of shareholders.