15 - Board engagement with shareholders

Question 1

Provision 3, and FRC Guidance on BE’s says in addition to form GMs, in order to engage with shareholders, board/chair should:

Answer 1

• Chair should seek regular engagement with major stakeholders to understand views on governance and performance
• Chairs of committees should seek engagement with shareholders on significant matters
• The SID, when called upon, should meet a sufficient range of major shareholders to develop understanding of their views
• Board should consider additional ways to engage with smaller shareholders (eg. webinars)

Question 2

4 procedures for AGMs as recommended by previous codes

Answer 2

• Giving shareholders an opportunity to ask questions (Q&A style)
• Resolutions are unbundled
• Including a ‘vote withheld’ box on proxy forms
• Disclosing information about proxy votes

Question 3

How can CoSec mitigate the risk involved with allowing Q&A at AGMs?

Answer 3

Ensure the chair is fully briefed on potential questions, such as those asked at previous AGMs and those received by the chair’s office

Question 4

2 methods of voting on a resolution

Answer 4

• Poll
• Show of hands

Question 5

2 advantages of voting by poll

Answer 5

• Voting power is in proportion to voted held
• Votes sent by proxy are included in the count

Question 6

Why might a shareholder tick the ‘vote withheld’ box for a resolution?

Answer 6

To indicate their displeasure about co’s proposal without actually voting against it
(votes withheld are not counted when deciding if a resolution has passed)

Question 7

What is the significance of 20% or more of the votes on a resolution being against it?

Answer 7

The company will need to explain what actions it intends to take to consult shareholders in order to understand the reasons behing the result

Question 8

3 limitations on using AGMs as a method for dialogue between companies and shareholders

Answer 8

• Only held once a year
• Probably limited attendance (usually held midweek in London)
• Limited time duration

Question 9

What is the difference between virtual and hybrid AGMs?

Answer 9

Virtual AGMs = fully virtual, not held in any particular place
Hybrid AGMs = Held at a set place but allowing virtual attendance

Question 10

CA 2006 - ecomms (3)

Answer 10

• Documents and info can be sent in hard copy or electronic form
• Companies can communicate by means of website if a shareholder has not opted out
• Shareholders have the right to ask for hard copies

Question 11

6 benefits to use of ecomms

Answer 11

• Cheaper to produce and deliver
• Environmental benefits
• Faster and more reliable
• Shareholders better informed as results can be posted electronically
• Ecomms are more likely to be seen by decision makers at investor institutions
• Greater likelihood of proxies being appointed