CBA’s Board opposes proposed company constitution amendment concerning high risk investments

Maria Nikolova

The proposal is made by 100 shareholders who hold approximately 0.007% of the CBA’s shares.

Commonwealth Bank of Australia (CBA) today published a notice about its 2020 Annual General Meeting (AGM) which will take place on Tuesday, 13 October 2020, at 9.30am (AEDT). The list of items includes a proposed resolution that CBA’s Board opposes.

A group of shareholders have proposed a resolution to amend the company’s Constitution. The 100 shareholders who made the proposal hold approximately 0.007% of CBA’s shares on issue (calculated as at the midnight before those shareholders gave the notice).

The resolution proposes inserting a new provision in the company’s Constitution which would require that, without the approval of shareholders by ordinary resolution, CBA could not co-invest with the Australian Government into a fund or entity that has a dominant purpose of investing equity or risk capital in small or medium enterprises unless the constituent documents of such fund or entity expressly limit its investments in a small or medium enterprise company to the underwriting of any shortfall arising from an offer to the general public made by such company.

The Board considers that such an amendment is unnecessary because CBA believes the Australian Business Growth Fund (the Fund) can make a difference by providing unique and incremental capital for the Small-Medium Enterprises (SMEs) in which it invests, and which might otherwise experience challenges accessing growth capital, to receive long-term equity capital investments to grow their businesses, and create more jobs. The success of similar funds in Canada, and the United Kingdom makes it clear that this model of support can provide support for small businesses with growth potential, the Board explains.

CBA has joined with the Commonwealth Government and other investors and announced an initial commitment of $100 million on 27 November 2019. Total commitments of $540 million have been made, which includes CBA’s commitment.

The Fund has independent governance arrangements with appropriate operating and commercial governance oversight, agreed by all shareholders.

Given these factors, the Board considers that the proposed amendment to the company’s Constitution is not in shareholders’ best interests. The Board recommends that shareholders vote against this item.

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