Aussie Investors Oppose NewsCorp’s Delaware Dodge

29 September 2004

The clan Murdoch's plan to reincorporate News Corporation from Adelaide, Australia, to the more accommodating corporate climate of Delaware USA has run into fierce opposition from an unexpected quarter -- the Australian Council of Superannuation Investors.

The ACSI, which represents Australian pension investors, said Monday it will advise members to vote against the Murdoch dynasty's proposal to switch the incorporation of the company to the US state of Delaware.

And for once it seems the patriarch and his offspring are not in a position to call the shots. Reincorporation abroad requires 75% shareholder approval and although the Murdoch family controls 30% of the voting stock, under Australian law they are not permitted to vote on the issue.

So the voting intentions of Australian institutions, which between them own some 19% of NewsCorp stock, are absolutely crucial to the approval of the Delaware scheme. However, the ACSI's advice is advisory only and its members are free to vote as they wish.

The advice has litle to do with patriotism, although there could be an element of injured national pride. Of far greater concern is the dumping by NewsCorp of the current Australian legal requirement that any investor amassing more than 20% of company stock must bid for the remainder of the shares.

The clan Murdoch refuses to export this rule to its proposed Delaware sanctuary – a decision, says the ACSI, that has "an unsavoury odour of further entrenchment of the board and management's hegemony in NewsCorp".

Complains the body's president Michael O'Sullivan: "We cannot accept that adhering to higher standards of corporate governance than the average American company can be a negative to the cost of capital or any other critical consideration.

"If you reincorporate in Delaware, the board and the major shareholder gets a bigger accretion of power and a greater ability to do what they want to do without having to refer it to shareholders and that's very attractive to them."

Data sourced from The Telegraph (UK); additional content by WARC staff