Typical resolutions at AGM of listed co

Question 1

What are the typical resolutions

Answer 1

1. Approval of directors’ remuneration report and of the directors’ remuneration policy;
2. Appointment and re-appointment of directors
3. Directors’ authority to allot shares (s.551 CA 2006)
4. Disapplying pre-emption rights (ss.570 CA 2006)
5. Market purchase of own shares (s.701 CA 2006)
6. Notice periods for General Meetings

Question 2

Approval of Remuneration Report

Answer 2

i) Remuneration Report
1. s.439 CA 2006: requires companies to put an advisory vote on the directors’ remuneration report to shareholders annually at their AGMs.
• Must include statement from the chairman of company’s remuneration committee which summarises the major decisions on/changes to directors’ remuneration made during the last financial year.
• Must also set out generally how company has implemented its Remuneration Policy during the last financial year, and how it intends to implement Remuneration Policy in next financial year.
• Non-binding, director’s entitlement to remuneration is not dependent on the resolution being passed, though is a good way for SH to express disquiet as bad publicity.

Question 3

Approval of Remuneration Policy

Answer 3

• 226B Directors cannot be paid unless in line with remuneration policy.
• 226E: any payment made in contravention of 226B will be void and held on trust for the company. – not bothering
• s. 439A(1) CA 2006: the remuneration policy must be put to a binding SH vote at least once every 3 years by OR, unless:
a) Remuneration Policy is being amended; or
b) The resolution to approve the Remuneration Report was not passed at previous AGM
So look out for… the date the Policy was approved, whether the resolution passed correctly, and whether the policy was changed. These are all potential triggers for a new vote.
• N.B. for your info: Over the course of recent AGM seasons, the trend has continued to be for disgruntled shareholders to vote against the Remuneration Report, rather than vote down the Remuneration Policy and potentially leave the issuer with a serious problem with the payment of its directors.

Question 4

Appointment and re-appointment of directors

Answer 4

• UKCGC Provision 18: all directors should be subject to annual re-election.
• Remember – compliance with Code not mandatory, companies are free to explain rather than comply with Provision 18 under LR 9.8.6(5) and (6) if they believe their existing arrangements ensure proper accountability, although this is unusual.
• s.160 CA 2006: the notice of AGM must contain a separate resolution for each appointment/re-appointment of a director.