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Press Release

For immediate release: Monday 30 July 2007


Paul Myners has today issued his fourth report to the Shareholder Voting Working Group (SVWG)¹ on his review of the impediments to voting UK shares.  Voting levels have risen to over 60%, up from 50% three years ago.  However, although much work is being put into determining how particular shares should be voted, not enough effort is then made to ensure that the voting process works and votes get through. 

Georgeson Shareholder Ltd traced the votes of 25 institutional investors at one FTSE 100 company's AGM in 2006 and found that almost 5% of the votes were "lost".  This demonstrates that the process is still flawed and that not enough importance is being given to voting at company meetings.  In particular, almost half of these "lost votes" were due to participants over-voting as they did not know their correct entitlement and issued instructions for more votes than they should.  This problem can be exacerbated by the use of omnibus accounts and can result in the entire instruction being rejected. 

Myners is urging all those involved in the voting system, particularly issuers, agents and registrars, to actively address these failings by making the system more efficient and transparent.  He will also be writing to a number of FTSE 100 Chairmen to ask them to trace their votes to see if any have been lost and report on the findings.  The National Association of Pension Funds, the Association of British Insurers and the Investment Management Association, the main trade associations representing the beneficial owners and their agents, support such exercises as they will help ensure the work undertaken in determining how to vote is not undermined by flaws in the voting process. 

Paul Myners, Chairman of the SVWG commented:

"Good progress has been made in the area of shareholder voting.  Voting levels have increased and investors are taking a much greater interest in deciding how to vote.  But no one involved in the process can take pride in the inherent weaknesses in the current process by which votes are transmitted and counted.  The risk of over-voting would not be countenanced in any other voting system.  I have a continuing fear that many investors have failed to take necessary steps to ensure that their shares cannot be borrowed to be voted in a way that is contrary to their economic interest.  I believe that company boards should now take the initiative in reviewing and reporting on the integrity of the voting process and outcomes at their own meetings."

Paul Myners' report to the SVWG is attached.


For further information and to request an interview with Mr Myners, please contact:
Mona Patel, Head of Communications, IMA, 020 7831 0898

Notes to Editors:

1.  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 includes representatives from the following organisations:

Association of Private Client Investment Managers and Stockbrokers
Association of British Insurers
Association of Investment Companies
Association of Private Clients and Stockbrokers
British Bankers Association
Euroclear SA
Investment Management Association
ICSA Registrars' Group
Investor Relations Society
Institute of Chartered Secretaries and Administrators
National Association of Pension Funds
Lloyds TSB Registrars
Pensions Investments Research Consultants
Unilever plc
University of Birmingham (Centre for Corporate Governance Research)
Department of Trade and Industry (Observer status only)

2.  Paul Myners' first report to the SVWG in January 2004 outlined a comprehensive and practical action plan to improve the voting process.  This report is an update on progress following reports in March and November 2005

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