Bruce Wallace Associates London
Bruce Wallace Associates London

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August 2019

1 August, 2019

AGM 2019 – PROVISION (4) 2018 UK CORPORATE GOVERNANCE CODE

As the main AGM season draws to a close, it can be easy to assume that with the meeting completed and resolutions passed, that general meeting matters can be parked until next year.However under the 2018 UK Corporate Governance Code (the ‘Code’) it is now a requirement for companies that received 20 per cent or more votes cast against the Board recommendation for a resolution to report within 6 months of the meeting and in the following annual report on actions taken in response to the vote received.(Provision (4) Code)

In the voting results announcement issued after the AGM, companies that comply with the Code, should have made a statement about any resolution that received a significant vote against.It is now appropriate for the Board to consider next steps on investor engagement, in readiness to report initially on its activities in the 6-month update statement.

Investment Association Public Register

The Investment Association set up the Public Register to track shareholder dissent at listed companies and records companies within the FTSE All Share that had received significant votes against resolutions at general meetings.The register is updated periodically, and it is likely that if a company is on the Register, they can expect additional scrutiny on all resolutions the following year.

6-Month Update Statement

Companies are required to provide an update on the views received from shareholders and actions taken and publish this update on the website, within 6 months of the meeting. The Investment Association has put together some guidance on what they expect to see in the Update Statements, namely that Statements should be standalone, describe the engagement undertaken and what actions have been taken and what future actions are intended.

Whilst the Statement should provide a meaningful update, companies are required to provide a final summary of what feedback it received and the actions and taken within the next annual report, or if applicable in the explanatory notes to the resolutions for next year’s meeting.It is not expected that everything will have been completed within 6 months.

Next Steps

There are some common actions that companies can undertake in readiness for preparing their 6-month statement, whatever the subject matter of the resolution that received the votes against:

  • Undertake a share register analysis to seek to identify where the significant votes came from.Whilst it may be possible at an institutional level to classify the votes received, evaluating where these votes came from in terms of beneficial ownership, will help target any investor engagement and put the Board in a stronger position.
  • If any reports were issued by proxy voting advisors regarding the company prior to the AGM, then pinpointing any institutions that may have followed this guidance can help to explain the votes received against.
  • Undertake a programme of investor engagement to seek to tackle the reasons for voting against the resolutions as well as address any further areas of concern.
  • Report back on investor meetings to the Board to consider the issues raised and what actions, if any, are to be taken.

Please contact Anne-Marie Palmer (anne-marie@brucewallace.co.uk; 07803 171 644) if you would like to discuss further.

Martha Bruce

martha@brucewallace.co.uk

Susan Wallace

susan@brucewallace.co.uk

Chloe Higgins

chloe@brucewallace.co.uk

Adrienne Graham

Adrienne@brucewallace.co.uk

Anne-Marie Palmer

anne-marie@brucewallace.co.uk

Registered office:
118 Pall Mall
London
SW1Y 5ED.

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