9.3 What the case studies showed

Shareholder control of the appointment of directors is a fundamental feature of company law. A premise for that control is that the directors are responsible for protecting the interests of shareholders in the management of the company. That premise needs amplification and modification in the case of a corporate trustee of a superannuation fund. The directors are to manage the company not only in the interests of shareholders but in the interests of members of the fund.

All superannuation trustees are obliged to prioritise the interests of members. Profitformember fund trustees differ from retail fund trustees. Retail fund trustees look to the interests of the members of their funds but also to the interests of their shareholders in, among other things, the trustee making a profit and paying a dividend.

If it could be said that an advantage of profitformember fund trustees is that they need only look to the interests of members and not also to the interests of shareholders, then it would seem to follow that one of the premises for unhindered control by shareholders over appointment of directors is reduced in force, if not eliminated. It follows that the rules for the appointment of directors should focus only on achieving governance that will be in the best interests of members.

Each of the case studies illustrated ways in which the rules conferring control over appointment of directors on shareholders might be at odds with that focus. In the case of AustralianSuper and Cbus, the requirement for shareholder approval of constitutional changes meant governance reforms have been slowed. In the case of Sunsuper, the exercise of shareholder power of appointment caused at least a time of instability and it might have led (but did not lead) to more serious consequences.

This is not to say that the conduct described might amount to misconduct. Nor do I think there was conduct of the trustee that might have fallen below community standards and expectations. The appointment of directors is conduct of the shareholders, not the trustee. I do not think it is necessary to reach a view about whether in any of the case studies the conduct of any shareholder might fall below community standards and expectations and Counsel Assisting did not submit that I should consider doing so. But I do note that these case studies, together with the case studies concerning mergers, invite consideration of whether shareholders should be required to exercise their powers in the best interests of members.