In accordance with ASX Listing Rule 3.17A, the wording of two proposed resolutions that have been requisitioned under section 249N of the Corporations Act for consideration at the Annual General Meeting of BHP Billiton Limited, to be held in Melbourne on 16 November 2017 (Limited AGM), is set out in Attachment A.
Consistent with the BHP Dual Listed Company framework and the Articles of Association of BHP Billiton Plc, the proposed resolutions will also be considered at the Annual General Meeting of BHP Billiton Plc (Plc AGM) which will be held in London on 19 October 2017.
The proposed resolutions have been requisitioned by shareholders of BHP Billiton Limited representing approximately 0.0075% of the shares on issue in BHP Billiton Limited (and approximately 0.0045% of the shares on issue in the combined BHP Group). Attachment B is a copy of the accompanying statement from the requisitioners that will be distributed to shareholders in accordance with section 249P of the Corporations Act.
Resolution 1 (as set out in Attachment A) will be proposed as a special resolution. Resolution 2 (as set out in Attachment A) will be proposed as an ordinary resolution. However, Resolution 2 will be a valid resolution only if Resolution 1 is approved by the required majority – that is, the validity of Resolution 2 is conditional on Resolution 1 being passed.
For the reasons set out below, the Board does not endorse Resolution 1. While the Board is supportive of some elements of Resolution 2, the Board has formed the view that, in its entirety, Resolution 2 is not in the interests of BHP shareholders as a whole.
Accordingly, the Board is recommending that shareholders vote against both of the resolutions.
The Board considers that the proposal to insert a new rule into the Constitution of BHP Billiton Limited in the form set out in Resolution 1 gives rise to a number of difficulties and uncertainties in practice, including undermining the authority and accountability of the Directors.
Under the Constitution of BHP Billiton Limited, the power to manage BHP’s business is vested in the Directors. It is important that the Directors be able to exercise this power as they see fit and be solely accountable for doing so.
The proposed amendment to permit resolutions which are advisory would create uncertainty and confusion, whereas the division of responsibility for decision-making as between the Board and shareholders needs to be clear.
In relation to the position under UK law which is mentioned in the statement by the requisitioners, legal advice obtained by BHP indicates that the ability to propose an advisory resolution by ordinary resolution under section 338 of the UK Companies Act 2006 has not been clearly established by UK case law.
In any event, shareholders already have various mechanisms available to them to express views and opinions.
Shareholders are able, and already have the right, to ask questions about or make comments on the management of BHP at any time, including at the AGMs. Further, if shareholders disapprove of actions taken by the Directors, shareholders can refuse to re-elect them or remove them from office by ordinary resolution.
In addition, there is regular and extensive engagement between BHP (at Chairman, non-executive director and management level) and BHP’s institutional shareholders around the world. Over the past four years, a significant part of this engagement has related to climate change. Publication by BHP of its 'Climate Change: Portfolio Analysis' in 2015 was a direct consequence of the constructive engagement the Company had with investors on the matter of scenario planning for a 2°C world.
Paragraph 1 of Resolution 2 requests a review of BHP’s direct and indirect public policy advocacy on energy policy and climate change from 2012 to the present day. It requests that the review describe the immediate and likely long term impacts of continued energy and climate policy uncertainty in Australia on BHP’s economic interests. Paragraph 2 requests the publication of a report on that review. Paragraph 3 requests that BHP terminate its membership of an industry body where there is ‘a pattern of manifest inconsistency’ between BHP’s positions on material public policy issues considered in the review and those of industry bodies of which BHP is a member.
As noted on the BHP website, BHP keeps under review its alignment with, and membership of, industry associations. The current review of industry associations of which BHP is a member will be completed by 31 December 2017, and BHP will make public the outcomes of that review.
BHP has always sought to make its position on significant public issues clear. However, BHP will further its efforts to ensure that material differences with industry associations on key issues are clearly understood. To that end, BHP will publish, by 31 December 2017, a list of the material differences between the positions we hold on climate and energy policy, and the advocacy positions on climate and energy policy taken by industry associations to which BHP belongs.
BHP has already published two reports describing its approach to the potential impacts on BHP of both an orderly and a more rapid response to climate change. This includes consideration of short, medium and long term policy responses in Australia and other relevant jurisdictions around the world.
The Board considers that the action BHP is already taking (that is, undertaking the review of industry associations and publishing the information described above, together with BHP’s consistent public position on climate change and energy policy as outlined below) obviates the need for Resolution 2.
BHP has set out its position on climate change and energy very clearly, including in its submission to the Independent Review into the Future Security of the National Electricity Market (Finkel Review), in which BHP expressed the following views on energy reform:
- energy security, energy affordability and emissions reduction should be considered on an integrated basis;
- technology neutrality should sit at the core of good policy because it provides industry with the necessary flexibility to achieve objectives at the lowest possible cost; and
- open and transparent energy markets are the best way to promote Australia’seconomic interests.
There is a wide range of views across industry, civil society, governments and other stakeholders on how best to address climate change and energy policy. BHP’s position is clear. BHP accepts the science, and believes that the world must limit climate change and provide access to energy. BHP is committed to action to reduce its emissions, build resilience to climate impacts and accelerate deployment of low emissions technologies.
For more information and attachments, please see our Exchange Release (PDF 200 kb)