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Press Release

For Immediate Release: Tuesday 3 February 2004


Paul Myners’¹ report to the Shareholder Voting Working Group (SVWG)², published today, outlines a comprehensive action programme to remove obstacles to casting votes by institutional investors at UK company meetings. The report, "A review of the impediments to voting UK shares", details a series of actions required from: beneficial owners of shares, companies or issuers, company registrars, investment managers, custodians and proxy voting agencies. The report also makes recommendations to the Department for Trade and Industry, the Financial Services Authority (FSA) and the Financial Reporting Council.

Speaking about the report Paul Myners commented:

"There has been continuing concern that the system for registering proxy votes at company meetings is not as efficient as it should be. Complications arise from the number of different participants involved and the confusing lines of responsibility. There is no single simple solution, no silver bullet to the problem of ‘lost votes’. However, significant improvements can be achieved through concerted action by all interested parties. There is nothing inherently flawed in the pipework that carried votes from the investor to the issuer.  What has previously been lacking is a commitment on the part of participants to make it work effectively”

The report has been welcomed by Industry Minister Jacqui Smith, who said:

"Voting is a vital way shareholders engage with companies.  This valuable report by Paul Myners for the Shareholder Voting Working Group addresses the practical steps which all parties involved in shareholder voting should take to improve that process.  

"I hope all will welcome and implement the recommendations. For the Government's part, I will of course be considering the legislative recommendations for changes to company law."

The report has also been endorsed by the Institutional Shareholders’ Committee³, the British Bankers' Association, the Institute of Chartered Secretaries and Administrators and the Association of Private Client Investment Managers and Stockbrokers. 

Among the conclusions and recommendations contained in the report are:

voting policy - beneficial owners should determine a voting policy and engage fully in its implementation

electronic voting - beneficial owners of shares should require their agents (custodians, investment managers etc) to have an electronic voting capability as part of their standard service conditions;

registering title to shares - beneficial owners should consider requiring their shares to be registered in a nominee company with designation in their own name or some other unique designation, rather than in an undesignated omnibus nominee account;

date for the appointment of proxies - the current 48 hour limit should be amended to two business days to take account of bank holidays and weekends;

stocklending - borrowing stock for the purpose of voting is not appropriate as it gives a proportion of the vote to an agent who has no on-going economic interest in the company. Beneficial owners should be fully aware of the implications for voting if their shares are lent and, when a resolution is contentious, should recall the related stock;

accountability - investment managers should actively exercise the votes in shares they hold or manage for beneficial owners and have a stated, public and regularly reviewed policy on voting UK shares;

voting resolutions at company meetings - best practice should be to call a poll (rather than a show of hands) on all resolutions at company meetings;

disclosing the results of polls and proxy votes - quoted companies should disclose on their websites and in summary in annual reports the results of polls of general meetings. The FSA should make it a listing requirement for the results of polls to be disclosed as a regulatory announcement to the market;

recognising votes withheld - votes consciously withheld can be a useful tool in communicating shareholders' reservations about a resolution, provided there is a clear explanation to the company as to why the vote has been withheld. Companies should provide a 'vote withheld' box on all proxy forms;

improving the powers of proxies - Company Law should be changed to give more rights to proxies so that they can speak and vote on a show of hands as well as a poll;

scrutiny of polls - Company Law should be amended to require independent scrutiny of polls if requested by shareholders.

A copy of Paul Myners’ Report "A review of the impediments to voting UK shares" is attached.


Attachment 1 - Full Report

For further information, please contact:

Paul Myners, Chairman, Shareholder Voting Working Group                    07734 020202

Richard Spiegelberg, CardewChancery                                                  020 7930 0777

Liz Murrall, Senior Adviser - Corporate Governance, IMA                                          020 7831 0898

Helen Stephenson, Communications Officer, IMA                                   020 7831 0898

 Notes to Editors:

1. Paul Myners was the Chairman of Gartmore Investment Management until his retirement in November 2001. Paul is currently Chairman of the Guardian Media Group and Aspen Re. In 2001 he became a non-executive director of mmO2 and sits on the boards of the Bank of New York and Marks and Spencer. In May 2000, Paul conducted a review of institutional investment on behalf of HM Treasury.  

2. The Shareholder Voting Working Group (SVWG) was established in September 1999 as the first industry wide group to act as an advisory body identifying and resolving the constraints, deterrents and logistical problems that impede the voting process. The group consists of the following organisations;

The Association of Private Client Investment Managers and Stockbrokers

The Association of British Insurers

The Association of Investment Trust Companies

The Bank of England

The British Bankers Association

CRESTCo Limited

The Investment Management Association

ICSA Registrars’ Group

Investor Relations Society

Institute of Chartered Secretaries and Administrators

National Association of Pension Funds

Pensions Investments Research Consultants


Unilever plc

University of Birmingham (Centre for Corporate Governance Research)

Department of Trade and Industry (Observer status only)

3. The Institutional Shareholders’ Committee consists of representatives from the Association of British Insurers, Investment Management Association, National Association of Pension Funds and Association of Investment Trust Companies.

4. The report has been welcomed by a number of UK trade associations. Comments include:

Christine Farnish, Chief Executive, National Association of Pension Funds

“For some time pension fund Trustees have expressed a clear wish to exercise their right to vote at the general meetings of the companies which they own. It is encouraging to see that, at last, serious steps are being taken to ensure that this wish can be translated into reality. Practical obstacles to the right to vote and the lack of a clear audit trail are not acceptable in the 21st century. The Shareholders' Voting Working Group, under the leadership of Paul Myners, has now provided a framework for the implementation of many of the recommendations made in the Newbold Report which was sponsored by the NAPF and, in addition, has made new suggestions which should make the effectiveness of proxy voting in the UK the match of any other system.”

Daniel Godfrey, Director General, Association of Investment Trust Companies

"We are very grateful to Paul Myners and the Shareholder Voting Working Group for their perceptive recommendations to improve both the quantity and quality of the voting of shares in the UK.  Shareholder voting is a crucial element in the drive to improve corporate performance.  Good corporate governance combined with active and responsible shareholder stewardship will contribute to improved corporate performance.  This is of clear benefit both to investors and to UK plc.  The AITC will play its part in encouraging our members to follow the recommendations which apply to them." 

Simon Hills, British Bankers’ Association

“Paul Myners’ report emphasises that electronic voting is a key tool in increasing investor participation in corporate governance and is a helpful reminder that more cooperation is needed to achieve this. Our custodian bank members recognise that they are an important link in the complex voting chain and are committed to working with investors to facilitate straight-through processing of electronic votes.” 

Angela Knight, Chief Executive, Association of Private Client Investment Managers & Stockbrokers

"Paul Myners provides a challenging contribution to the debate on how the link can be restored between investors and the companies in which they invest."

Peter Montagnon, Head of Investment Affairs, Association of British Insurers

“It is vital that we have an effective and reliable means of recording and casting votes. Paul Myners' recommendations rightly focus on transparency and accountability throughout the voting chain. Provided there is follow-through from all concerned, we can expect significant improvement to the way the system works.”

Caroline Phillips, Director, Policy Unit, Institute of Chartered Secretaries and Administrators

“ICSA thanks Paul Myners for his in-depth analysis of the “lost votes” problem and particularly endorses the central recommendations for the greater use of technology in the voting process, which should, over time, bring about a noticeable improvement in the efficiencies of the system.”  

Richard Saunders, Chief Executive, Investment Management Association

"An efficient voting system is an essential component of proper accountability to the capital markets. Paul Myners' report has shone a light on the problems encountered in this important area and lays down a challenge to all parties to bring about improvement. The IMA will work with its members and with other trade associations to achieve this."

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