ALERT: UPCOMING RACQ AGM - Proposed Changes to Member Base
These proposed RACQ changes are important to be aware of. I have also included three hyperlinks below: 1/ is the AGM + explanatory memorandum; 2&3/ are two very interesting (& compelling) articles discussing the pros and cons of demutualisation.
For all RACQ members, please refer to the 12 page Notice of AGM (you may have received this in the mail - it has a yellow banner on white glossy pages, and may have come in cling wrap with a recent RACQ magazine) as per this link:
http://www.racq.com.au/about/racq/corporate-governance/2014-annual-general-meeting
I have no issues with the first two resolutions, and intend to vote in favour of both.
I specifically wish to draw your attention to Resolutions 3, 4 and 5 for which they are seeking members to vote. Unfortunately most members will not be alert that something important is being proposed, and may be very annoyed that the RACQ Club rules are about to be changed without much fanfare, and to their own detriment.
Resolution 3 is proposing to make changes to the RACQ Constitution such that a New Constitution is being proposed. I have read the preamble + the latest Annual Report and have two issues with what is proposed, as follows:
1/ (as per Note 25 on page 6) if resolution 3 is passed (requiring approval of 75% of Eligible members present and voting) then both resolutions 4 & 5 (discussed below) only require "a simple majority (more than 50%) of members present and voting";
2/ One of the reasons stated (on page 7 of the Annual Report) is to permit board appointment of directors with specialist expertise, in addition to member-elected regional representatives - my issue with this is that, as a mutual organisation, it is very important that the directors are member elected. Watering down the elected representatives on the board is one tactic used prior to demutualisation, and should not be allowed.
I intend to vote against resolution 3 for both these reasons, but particularly in order to have the best chance of voting down resolutions 4 & 5.
Resolution 4 proposes the inclusion of an additional rule (rule 17) in the New Constitution to provide for a change of ownership approval procedure. The full terms of rule 17 (which includes a definition of 'demutualisation') are shown in yellow at note 34 on pages 7&8. Yes - the word 'demutualisation' has been mentioned. Demutualisation of itself is not necessarily a bad thing for the existing 1.2 million RACQ members, but when combined with what is proposed in resolution 5 is what causes concern. Hyperlinks to two very pertinent articles on issues relating to other organisations that have demutualised in the past (including NRMA Insurance & AMP et al) have been included below.
As mentioned above, if resolution 3 is passed with a 75% majority, it is possible that both resolution 4 (&5) can each be approved with a 50% majority only, as they are deemed to be ordinary (as Notes 28 and 32 on page 7 appear contradictory on this point).
Resolution 5 is proposing an expansion of the RACQ membership base "to include persons that acquire other RACQ products (such as insurance products or other products that may be offered by RACQ in the future) and not just roadside products" (as described in note 38 on page 8). However, no mention has been made of what products when purchased will convey membership rights, and what won't. Either way, this resolution "will result in a dilution of existing members" as noted in Note 42 on page 9.
Why would RACQ be raising these issues including proposed changes to the Constitution, discussing demutualisation and proposing an expansion/ dilution of the membership base unless they have plans to demutualise and to expand the membership base beyond the current RACQ membership base?
Further, are the directors acting in the best interests of the current membership base by proposing the changes that the current directors have recommended?
I intend to vote against all of Resolutions 3, 4 & 5 in order that a more comprehensive discussion is had about the proposed benefits to current RACQ members, and that the existing 1.2 million RACQ members benefits are not watered down.
The Proxy (voting) form is on page 10 of the 12 page booklet. I intend to attend the AGM, and I am happy to be appointed PROXY by any RACQ members who wish to appoint me to vote on their behalf. As such, please process the Proxy Form as follows:
1/ Complete your full name and address and RACQ member number (this a 16 digit number found on your membership card or renewal notice) in Section 1;
2/ Write my full name (Stephen Raymond Kelly) on the blank line in Section 2 if you are unable to attend the meeting on 20/11 or otherwise have no-one else to nominate as your proxy to vote on your behalf;
3/ Mark your voting intentions with an 'X' (not a tick) in all five boxes (as discussed above, I intend to vote 'FOR' both Resolutions 1 & 2 and 'AGAINST' Resolutions 3,4 & 5;
4/ Lodge your proxy form FULLY COMPLETED by 2.30pm on 18/11/14 to RACQ by mail, hand delivery, email or fax as detailed on page 11 of the attached explanatory memorandum;
5/ Forward a copy of your completed Proxy form to me by fax or scanned copy by email on the same day;
If you have not received or otherwise cannot locate the 12 page booklet entitled 'Notice of Annual General Meeting' the 12 page notice of AGM & explanatory memorandum has been attached + the link is enclosed above.
If you feel as I do about these proposed changes, then please on-forward this to as many of your contacts as you can as soon as possible. I have requested some state wide contacts to also distribute this through their own networks, but please do not rely on just my own efforts. There are 1.2 million RACQ members whose club membership benefits could be seriously diluted, just because they were not aware of the proposed changes, or were unaware of what to do about it.
Further reading about issues with other mutual organisations (such as NRMA & AMP) demutualising are contained in the following two articles:
http://www.australia.coop/rm_lm_2000.htm
http://coopsnsw.coop/wp-content/uploads/2014/05/demutualisation.pdf
If you have any queries about this, please do not hesitate to liaise with me as soon as possible.
Regards,
Steve Kelly
Email: steve@makefd.com.au
Ph: (07) 3844 3899
Fax: (07) 3844 2188
Mob: 0403 049 890
Level 1 South Bank House, Stanley Street Plaza, South Brisbane QLD 4101 PO Box 8333 Woolloongabba QLD 4102
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.
Opinions constitute our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the National Australia group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.
Steve Kelly, Mary Kelly and MaKe Financial Decisions Pty. Ltd., trading as MaKe Financial Decisions are Authorised Representative(s) of MLC Financial Planning, Australian Financial Services Licensee, 105 – 153 Miller Street North Sydney NSW 2060
