Insider trading rules are stymieing shareholder activism in Australia, fostering a culture of bad management in the nation's listed companies and curbing growth, prominent investor and venture capitalist Mark Carnegie says.

Shareholders trying to shake up underperfoming boards struggle to build support among fund managers, who are prevented from buying or selling stock if they know a deal is planned but hasn't been announced, Carnegie said in an interview in Sydney this week.

Venture capitalist Mark Carnegie says fund managers have "shown a history of talking big in quietened rooms and then acting cowardly."

"The sorts of unofficial communications that happen in the US and England are unable to happen in Australia," said Carnegie, 52, whose advisory firm Carnegie, Wylie & Co. was sold to Lazard in 2007. "You need to be very, very sure of your ground in terms of the number of shareholders who will vote with you before you start your campaign, and that's what people have found hard."

In the US, investors such as Carl Icahn and Kirk Kerkorian have used minority shareholdings to push for changes at companies including Apple and General Motors. The dearth of such activism in Australia had led to a lack of board accountability, contributing to investment capital being misspent, Carnegie said, pointing to wasteful spending in the country's natural gas export projects.