On 19 November 2020, ISS published updated proxy voting guidelines for Australia. 
Below is a summary of the changes effective for meetings on or after 1 February 2021.

Auditor fees

ISS provides for a more specific definition of “non-audit fees” when determining if the non-audit fees paid to the auditor are routinely in excess of annual audit fees and tax compliance/preparation fees. They also permit the exclusion of significant one-time capital structure events (such as initial public offerings or demergers) from “other fees” for the purposes of determining the ratio of 
non-audit to audit-related fees.

Issue of Shares: Advanced and retrospective approval

ISS will generally support a request for pre-emptive rights for up to 15 percent of the issued share under Listing Rule 7.1 or the retrospective approval under Listing Rule 7.4 up to 15 percent. However, they note that dilution of 10 percent or greater is considered high and will be considered on a case-by-case basis.


ISS has clarified some examples of exceptional circumstances which may allow directors to sit on more than a total of five listed boards (a chair as equivalent to two board positions). This includes entities outside the S&P/ASX300 index only and are:
Research, development, exploration and/or non-operating companies; or
Externally managed funds.


ISS requires disclosure of board and committee attendance. Should none be provided ISS will recommend against the chairman or deputy chairman.


ISS will recommend against an executive director and the chairman and/or the chairman of the relevant committee should an executive sit as a member of either the audit or remuneration committee.

Combined Chair and CEO

ISS will generally recommend against a director who combines the CEO and chairman roles, unless the company provides strong justification as to why this non-standard governance arrangement is appropriate for the specific situation of the company. This upholds the ASX Corporate Governance Council (CGC) Recommendation 2.5.


ISS will generally vote against the chair of the nomination committee or the chairman of the board if there are no women on the board. They have allowed for mitigating factors including:
  • Commitment to appoint at least one female director as disclosed in an announcements to the ASX; or
  • The presence of a female directors on the board during the preceding year.

Governance Failures

ISS has indicated they will recommend against the Chairman of the board if there is evidence of long-running, systemic issues regarding governance failures, or board and committee composition which are not adequately address. This is an extension of the existing policy to vote against individual directors or committee members for governance failures. 
When voting on election of directors, ISS will now also consider voting against a director who has served on a remuneration committee of a non-associated company which has demonstrated problematic remuneration practices.

Shareholder proposals

ISS have updated the factors to which they will consider when assessing an environment or social shareholder proposal. They will likely consider recommending for a proposal if there are significant controversies, fines, penalties, or litigation associated with the company’s environmental or social practices.
Even though there is legal precedent which permits the chairman of a meeting to deny a non-binding or advisory vote, ISS expects companies to disclose the proxy votes cast ahead of a meeting for environmental or social proposal in the vote results announced to the ASX.

Remuneration - STI

ISS recognises the now common and best practice of deferral of a portion of short-term incentive (STI) awards. ISS is seeking full disclosure of terms and rationale for the STI deferral, alignment with medium term company objectives and vesting between one to five years. Given the length of the deferral, aspects on the long-term equity grants should be considered including malus/clawback provisions, treatment on termination and change of control and minimum shareholding requirements.