EZINE > June 2011 inside this issue: Webcast Letitia Trimmer explains what service quality means at Equiniti Our Man down Under Tom Rowe shares an Australian perspective on corporate governance Britain's pension challenge Bernard Jennings explains how auto-enrolment could affect the pensions landscape Gender, age and loyalty â€“ the facts Can demographic factors influence employee loyalty? We look at some interesting findings
page 5: Is the future golden for the
EZINE > June 2011
Letitia Trimmer, Head of Quality & Customer Complaints, discusses how our people, technology and processes set us apart from the competition
Webcast: Service quality
launch video in browser
australia > on page 3
EZINE > june 2011
What is life like for a company secretary in Australia? Tom Rowe, National Manager of Company Matters reveals all
Our man Down Under The role of company secretary has, and always will involve the ritual of minutes, agendas, action lists, compiling board papers (and following up late papers) and the endless form filling and filing with the various State and Federal regulators. In Australia, the company secretary is a statutory appointment that must be made for a public company and is often held as a part of another executive role, such as chief financial officer or general counsel. In recent years the profile of the company secretary within many companies has increased, with the role expanding from solely an administrator to a governance professional as companies respond to the increased volume and standard of reporting obligations. The change to reporting obligations can arguably be attributed to a number of factors, including the wash-out of the global financial crisis with the increased public and legislator attention to corporate governance. Other
factors include the appearance of classaction litigation funders in the Australian market place, the activity of regulators in pursuing breaches of the Corporations Act and recent judgements dealing with directors’ and officers’ duties – particularly as they relate to the continuous disclosure obligations of listed companies and their officers. These changes have undoubtedly led to directors, in particular nonexecutive directors, feeling an increased level of exposure and looking to the executive staff, including the company secretary for assurance.
The increased public awareness of corporate governance, which in Australia seems to have manifested itself in attention as to how much executives are paid, has resulted in some interesting legislative changes. The changes commenced in 2009 with amendments to the Corporations Act to restrict the quantum of termination benefits that can be paid to the top five paid executives to the equivalent of one year’s base salary (subject to exceptions) without shareholder approval. This year will see the commencement of the ‘two strikes’ rule, whereby the shareholders will vote on whether the whole Board (other than the managing director) will be required to be put up for election by the shareholders if the Remuneration Report receives a ‘no’ vote of 25% or more in two consecutive years. The Remuneration Report is voted on by shareholders as an advisory resolution only. Whether these changes will save Australia from the next corporate collapse remains continued on page 43
EZINE > june 2011
Australia to be seen, but it will certainly increase the workload of the company secretary, particularly if the shareholders do put the board up for election, as the company secretary has 90 days to hold the meeting. The rise of class-action litigation funders, and recent high-profile cases dealing with directorsâ€™ duties and continuous disclosure breaches has seen those directors without a crystal ball being understandably nervous that their comments may stand up to review. While the law around misleading and deceptive conduct and continuous disclosure has not changed, the knowledge that announcements may be reviewed with 20/20 hindsight by classaction lawyers is now front of mind for many directors and executives when considering the wording of public announcements. This attention on improving corporate governance through legislation and increased reporting obligations, as a means to de-risk equity investing, may not be particular to Australia and it may not continue through the business cycle. It has however, certainly made it more interesting to be a company secretary, as to perform the role effectively the person has to be familiar with legal, financial and accounting principles together with investor
relations and the changing legislative landscape. As an example, the Australian Securities and Investment Commission recently issued guidance regarding the use of â€˜non-conforming financial informationâ€™ in financial reports, a concept that requires an understanding of the accounting standards to determine whether information is conforming or otherwise. The Commission also issued guidance on prospectus content prohibiting the use of
photographs before the investment overview section in a prospectus and then only when meaningful and relevant. The company secretary now needs to understand what pictures mean as well!
For further information Please visit www. companymatters.com.au
About Company Matters Company Matters Pty Limited was established to bridge the service gap between a sole practitioner company secretarial service and a corporate law firm in Australia. The company now assists a wide range of clients by providing independent advice on emerging corporate governance issues, practical legal advice and compliance solutions. Company Matters also provides an outsourced company secretary service, full or part-time, or cover for unforeseen vacancies.
Xafinity > on page 5
EZINE > June 2011
Bernard Jennings from Xafinity Consulting reveals the impact of Britain’s pension system on employers – and the implications of auto-enrolment
Britain’s pension challenge The pensions industry is battling with the continuing shift from companysponsored occupational final salary pension schemes to a range of alternative defined contribution models. Reliable surveys show at least 12 million of the working population are making little or no financial provision for their retirement. Increasing longevity is putting great pressure on company-sponsored pension schemes, personal pensions, personal savings, social services, the State pension system, the National Health system and long-term care provisions. The scale and complexity of legislation and regulation has had a hugely adverse impact on the attitude of employers in relation to workplace pension provision. Costs associated with operating pensions schemes continue to rise and there seems to be a lack of scale,
which adversely affects the smaller company pension scheme. There is a worrying lack of consumer confidence in the pensions industry, which manifests itself in a reluctance to join workplace pension schemes or to commit long-term savings to tax-advantaged personal pension arrangements. Our low State pension benefits put us at the bottom of the European heap in terms of financial support for our elderly citizens. Whilst there are proposals from the Coalition Government to change this, there is still far too high a proportion of our pensioners reliant on means-tested benefits for life’s essentials. The first guest speaker at a recent pensions strategy conference that we held for clients used the strapline ‘Britain’s pensions system is broken – we need to fix it’. Whilst we may not all share that sentiment fully, there are clearly many challenges to the continued on page 6
EZINE > june 2011
Xafinity pensions industry in the UK â€“ and Xafinity has a part to play in delivering solutions. Auto-enrolment comes into force in 2012 and imposes the following on all employers: n
E mployers will be required to ensure that all eligible staff are automatically enrolled into a qualifying pension scheme with benefit provision related to prescribed age bands and earnings bands. A qualifying pension scheme can either be the employerâ€™s existing arrangement or a new arrangement. The employer will be required to make a minimum contribution to the qualifying scheme.
There are many thousands of companies out there who have had inadequate pension provision for their staff in the past who now must face up to the implications of change.
E mployers will also need to provide information to staff so that they can understand the pension scheme they have been enrolled into, the contributions they will be required to pay and their right to opt out if they wish to. F inally, employers will be required to maintain records about members and their contribution history.
provision for their staff in the past who now must face up to the implications of change. Xafinity has a range of support services in place to help companies address these issues.
For more information: Please contact Bernard Jennings at Xafinity at bernard. firstname.lastname@example.org
Auto-enrolment is a short step away from compulsion and reflects the Governmentâ€™s concern that so many of its citizens are making inadequate provision for retirement and end up looking to the State for benefits post retirement. Xafinity is already discussing the duties imposed on our clients by auto-enrolment and many are looking at the detailed implications of enrolling their current proportion of nonjoiners into a qualifying pension scheme. Whether this qualifying pension scheme should be the existing arrangement or a new arrangement is a key factor in the support we are giving to clients. Auto-enrolment means that there are many thousands of companies out there who have had inadequate pension
Gender & age> on page 7
EZINE > june 2011
Gender & age
Diversity in the workplace is a hot potato at the moment. Research from Equiniti reveals a fresh angle on how gender and age influence employee loyalty
Gender, age and loyalty – the facts Issues facing women in the workplace have been getting a lot of media attention recently. Earlier this month, linguistics expert Dr Judith Baxter made headlines with research claiming that women are holding themselves back by not being sufficiently forthright in the boardroom (see p8). And in the most recent issue of The Equiniti Magazine, we explored the growing pressure on businesses to encourage greater diversity in the boardroom – including a recognition of the added benefits that female representation can bring. Another twist on the same theme lies in recent research by Equiniti showing that women are more loyal employees than men. The research applies to the broader workplace, rather than just the boardroom, and is part of a detailed Workplace Loyalty Index that the company has developed. The research found that 56.2% of women describe
themselves as very loyal to their workplace, compared to 42.5% of men. But even more significantly, Equiniti also found that, after participating in an employee share plan (ESP), women exhibit a three-fold boost to loyalty compared to men. The research also found that ESPs are particularly effective in boosting the loyalty of those aged between 45 and 50 (among both sexes) and that the industry sectors where ESPs have the biggest impact on loyalty are media, food & beverage, and automobiles & parts. Perhaps one of the most surprising facts to emerge from the index was that adults aged 30 or below were the most likely age group to describe themselves as ‘very loyal’. “At a time when companies are looking to measure the value gained from share plans, employee engagement is one of the key metrics that determines success,” comments Phil Ainsley, Director of Employee Share Plans.
For more information : Please contact John Daughtrey on 0792 110 5629 or email email@example.com continued on page 7
EZINE > june 2011
Gender & age Are women getting a raw deal in the boardroom? Research from linguistics expert Dr Judith Baxter claims that women are suffering in the boardroom because of techniques they use to avoid conflict. Dr Baxter found that women were four times more likely than men to be self-deprecating or apologetic in boardroom discussions, with the consequence that their male colleagues tend to get their way more often. Interviewed in The Observer, Dr Baxter, based at Aston University, said: “(Women) have to work really hard to hit the right note with their colleagues,” she said. “I have seen a woman use all the wrong linguistic strategies, and she lost the room. While men tend towards direct and straight talking, women avoid being directly confrontational and use a range of strategies to preserve a range of alliances, if not friendships, to achieve their agenda.”
Do You have a view? Let us hear your thoughts on Dr Baxter's research by emailing firstname.lastname@example.org continued on page 8