Corporate Governance

Corporate Governance News

This section on Corporate Governance provides investors with the latest topical news plus some informal comments and insights from ShareSoc’s directors and other contributors.

Vanguard backing shareholder committees

According to a report in the Financial Times this morning, Vanguard is to promote the idea of "shareholder liaison committees" to improve corporate governance. This is of particular significance because Vanguard is one of the largest investment groups in the world and overtook Pimco last year to become the second largest fund manager.  Vanguard primarily runs low cost index tracker funds and therefore has to hold all major companies. Indeed they are one of the largest holders of shares in many ...

BP and Shell facing climate change resolutions

Both BP and Shell are likely to face resolutions at their next AGMs which will raise the issue of climate change. A coalition of investment groups including ShareAction and the Local Authority Pension Fund (LAPF) are looking for signatories to a requisition for a resolution to require more reporting by these companies on various aspects of their approach to carbon reduction and emissions management. See http://www.lapfforum.org/news/co-filers-sought-for-2015-shell-and-bp-agm-resolutions for more information. Comment: Some investors feel that the Annual Reports of such companies are already ...

Progress on the Kay Review

Back in 2011 the Government commissioned Prof. John Kay to review the operation of UK stock markets. There were concerns about "short-termism" by investors, poor corporate governance in companies, excessive executive pay, lack of engagement by investors with companies, high investment charges and excessive intermediation in the investment chain. The resulting report was a very good analysis of the defects in the way the market operated and the recommendations in the report for change were generally accepted by the Government. The Government ...

Why should nominee operators have rights?

Following a meeting at the BIS Department where I discussed the issues associated with Part 9 of the Companies Act, and our suggestion that all shareholders (including those in nominee accounts) be on the share register of companies, I had some further thoughts on this subject. On reflection it seems very odd to me that nominee operators (i.e. your stockbroker) have the rights endowed by the Companies Act on shareholders. Investors in nominee accounts have no such rights (voting rights, information rights, ...

Shareholder rights – the way forward

The Investors Chronicle published a five page article on Friday (7/11/2014) on the campaign for improved shareholder rights under the title "Take Control". The writer Julia Bradshaw gave a good overview of the position of voting and information rights in the UK in comparison with other countries - yes we are way behind most of them - and the activities of representative shareholder associations. The legal risks of holding shares in nominee accounts and why anyone who understands the intricacies of ...

Shareholder Rights campaign launched

Last week ShareSoc launched a campaign to improve shareholder rights with a meeting in London. It focussed on the problems associated with nominee accounts and the adopted legal requirement to replace paper share certificates with an electronic system in a few years time. There was an impressive line-up of speakers at the meeting which included John Kay (author of the Kay Review and FT writer), Michael Kempe from Capita representing the ICSA Registrars Group, Peter Swabey from ICSA, John Lee (Lord Lee ...

The Tesco Board – fit for purpose?

There was a very good article in the Financial Times today by Luke Johnson. It covers the problems at Tesco and suggests that "the stewardship at Tesco has been woeful".  A particular focus is on the experience of board members, of which only one is executive (recently appointed Dave Lewis). It says "Like every single other director on the main board, he has no executive experience as a retailer whatsoever". Luke suggests they might have a wide and impressive set of ...

Diageo AGM and Scottish Independence Postscript

Yesterday I attended the Annual General Meeting of Diageo Plc. Being the day of the Scottish Independence vote, there were some questions on that issue for the board, but all the CEO said was that you can be assured we will fiercely fight for free trade, currency stability and no more tax and regulation. The Chairman said it was for the people of Scotland to decide, even though Diageo is headquartered in Scotland. You know the outcome by now and I ...

Guaranteed Rights for All Shareholders – Campaign Launch Meeting

On the 14th October 2014 ShareSoc is launching a campaign to give full rights to ALL shareholders. At present most private investors purchase shares in nominee accounts. With a very few exceptions this means that they have no automatic rights to vote, to attend General Meetings of companies or even receive information on the affairs of the company. Investors in public companies have been disenfranchised and their rights undermined. The meeting on the 14th October 2014 will explain how and why this situation ...

Berkeley Group and British Country Inns

I attended the Annual General Meeting of housebuilders Berkeley Group today. Lots of questions from shareholders this year (apparently there were none last year), and a request for there to be a presentation in future. That I supported as it is also ShareSoc's policy.  A full report is also available to full members. Some of the comments from Chairman Tony Pidgeley were most interesting. It included his solution to how to solve the housing crisis in London and the South East, but ...
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