Corporate Governance - Shareholder Engagement

Question 1

What does the UK Corporate Governance Code rquired by way of Shareholder and Stakeholder Engagement?

Answer 1

For company to meet responsibilities to stakeholders and shareholders, board should ensure effective engagement with and encourage participation from these parties (Principle D).

Question 2

What is the Board’s Principal Stakeholder Engagement Responsibilities outside GM?

Answer 2

Provision 3, FRC Guidance on Board Effectivess:
- Chair should seek regular engagement with major stakeholders to understand their views on governance and performance against strategy.
- Committee chairs should engage with shareholders on significant matters related to their areas of responsibility.
- Senior independent director should meet range of major stakeholders to develop balanced understanding of views, if required.
- Boards should consider additional ways to engage with small shareholders (e.g. roundtables; webinars; workshops).

Question 3

What are Key Considerations relevant to Arranging and Convening the Company’s Annual General Meeting?

Answer 3

1. Minimum of 21 day advice notice required under CA ‘06.
2. Chair shoud arrange audit, nomination and remuneration committee chairs, together with directors, to attend.
3. Listed companies should conduct votes by poll (rather than show of hands) - ensures each shares is counted together with proxy votes.
4. Consider whether electronic, remote attendance arrangement should be made (as permitted under s.360A, CA ‘06).
5. Under Code, if =>20% of votes cast against board–endorsed resolution, company should explain how it will consult with shareholders to understand result.

Question 4

What are the Limitations of AGM (and why do Companies use other Shareholder Engagement Means)?

Answer 4

1. AGM is an annual event.
2. Location may make attendance difficult.
3. Limited time.

Question 5

What are five Key Benefits of Electronic GM Communications?

Answer 5

1. Cheaper.
2. Environmentally friendly.
3. Faster and more reliable.
4. Enables better engagement with overseas shareholders.
5. Improves voting participation.