AWI director says little to fear with shareholder expulsion clauses

Terry Sim, November 8, 2019

NSW wool broker  and AWI director Don Macdonald.

AUSTRALIAN Wool Innovation director Don Macdonald believes wool growers and industry bodies have little to fear from expulsion clauses proposed for the AWI Constitution.

The AWI board has recommended its shareholders approve a job lot of constitutional changes at its 2019 annual general meeting, including two clauses that would allow the company to expel shareholders.

The proposed expulsion clause changes to the AWI Constitution state that if the board determines, or the company in general meeting resolves, “on reasonable grounds”, that a shareholder be expelled, the shareholder’s shares will be immediately transferred to a nominee company at no consideration. Such a company would have no voting rights for the shares it held. AWI’s current constitution states that a shareholder ceases to be a shareholder if they are no longer engaged in a wool-producing business.

The inclusion of the expulsion clauses in a constitutional change job lot has shocked many grower bodies and potentially jeopardised the implementation of changes recommended by 2018 EY review of AWI’s performance and governance, including removal of the nomination requirement of director candidates to produce 100 shareholder signatures. The constitutional change resolution, item 2, at the AGM, needs the approval of 75 percent of votes cast.

The 2018 EY review of AWI’s performance and governance recommended that AWI’s constitution be amended to allow a shareholder to resign, and to allow shareholders or directors to expel a shareholder on reasonable grounds. The review quoted Dairy Australia Ltd provisions that a member is expelled by the board for not complying with the constitution, rules or regulations of the company, or has acted in a way that, in the opinion of the board is prejudicial to the interests of the company, or is expelled by the members by a resolution passed at a general meeting.

‘Reasonable grounds’ would apply to malicious intent

Until today, AWI board has refused to clarify what it believes constitutes ‘reasonable grounds’ apart from an unidentified spokesperson stating that “the power to expel a shareholder would only ever be exercised by the board in limited circumstances.”

Mr Macdonald said he has been told by AWI company secretary Jim Story that ‘reasonable grounds’ would apply to a shareholder wanting to do harm to the company or AWI staff.

“Definitely not because a shareholder was picking fights with the company over policy issues or governance etc.

“There is no way a board would ever act to expel a member for being a critic of the company, rather it would have to be behaviour of a malicious nature,” Mr Story said.

Mr Macdonald believes that a shareholder would have to show malice towards AWI for the board to have ‘reasonable grounds’ for expulsion.

“I believe that the wording of that (the expulsion clauses) covers shareholders from the board expelling shareholders on a whim because they have don’t like what they are saying.

“The fear that shareholders might be expelled because they are always hoisting the flag to try to pull AWI to order is overstated,” he said.

“I don’t believe that that would be reasonable grounds for the board to expel them as shareholders; there would have to be something malicious for the board to be able to expel a shareholder.

“I really think that on balance, shareholders should support these amendments to the constitution,” Mr Macdonald said.

“We’ve got one little roughie in there and a whole raft of changes that are for the betterment of the shareholders.”

Mr Macdonald said he wasn’t aware that the expulsion clauses, which were recommended to AWI in the EY review, would be included in the job lot resolution of constitutional changes.

“I wasn’t, but I’ve now had a look at it and on balance, we are better off supporting the motion.

“And I think that there is enough in the wording to provide comfort for anyone who feels they are unjustly treated.”



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  1. Martin Oppenheimer, November 11, 2019

    Who is running AWI if directors have no idea about changes to the constitution that are presented to shareholders at the AGM?

    Is there a ‘board within the board’?

  2. Robert Ingram, November 9, 2019

    Don, I have enormous respect for you and greatly and sincerely appreciate the work you are doing for the “round earthers” in the wool industry. But your response in regard to the expulsion clauses reminds me of a speech made in London on 30 Sept 1938 “trust me it will never happen – peace in our time.” As long as expulsion clauses are in a constitution they can be used by a board that forbids questioning and accountability. It is the equivalent of bovine scat thrown in the air that does not come back to earth. If “Item 2” is passed at the AGM and the current AWI directors are re-elected, then “yes, I choose to accept the mission Mr Brassel’ to be the first shareholder expelled by the board from the company, purely for insisting on transparency, accountability and good governance.

  3. Jack Cleary, November 8, 2019

    My impression is that the reporting is based in favour of the AWI. The comments of Mr MacDonald are similarly narcissistic to those of Mr Merriman. These people seem to be of an opinion they are ‘special’ owing to their AWI and industry power. If people have little to fear from the proposed expulsion then why are they being proposed? Later Mr Macdonald said ‘And I think that there is enough in the wording to provide comfort for anyone who feels they are unjustly treated.” What does that mean? Is it ‘sorry you are being expelled, we’ll miss having you around as a coconut shy, ‘good luck in your next life’? Or is it ‘be pleased you are only being expelled, we could have made your life a misery of court costs….be happy…be happy…be happy?
    The significant matter is that this hierarchy should not have the power to judge and dismiss members and to disenfranchise them. In my view, the hierarchy and perhaps ‘boy’s club’ is taking o na judicial role for which they are unqualified and sustain cognitive and other bias’ which would impair their judgement.

    Their appropriation of power over members and introducing threats and expulsion ‘clauses’ should be rejected by all members…however sympathetic to MacDonald and Merriman…as inappropriate and likely unlawful.

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