By Rachel Alembakis
MELBOURNE — With approximately seven months until the next Australian proxy voting season begins, industry participants are pushing to correct a fault that has led one money manager to conclude at least 4% of its votes "went missing" after being sent to vote registrars.
Observers say that because the final step of the voting process — when custodians or proxy managers send voting tallies to registrars — is not automated, there is no way to know if votes are received and accurately counted.
Registrars counter that because share holdings can change over the 30-day period between the time that a publicly held company notifies shareholders of the annual general meeting and the registrar officially tallies the vote immediately before the meeting, registrars do not always have the time to communicate discrepancies to institutional shareholders, and in some cases will reject an entire slate to avoid improperly attributing votes of shares that no longer belong to the shareholder.
Currently, all institutional proxy votes must be faxed or mailed from custodians or proxy vote service providers to the registrars, who manually enter votes into their systems. Retail shareholders can cast their proxy votes electronically, an option not available to institutional shareholders, noted Dean Paatsch, director of operation at Melbourne based Institutional Shareholder Services Australia Pty. Ltd.
"Institutional voters can't vote the proxies via the web through the major registrars in Australia if they have split votes," Mr. Paatsch said. "It's a major issue. There is a transparent electronic system that we provide for custodians to aggregate their votes around the world. It's unacceptable, in this day and age, that the best registries can do is provide an opaque system, reliant on an operator to rekey information that's already been entered electronically."