Tick in the box
A NATIONAL ASSOCIATION of Pension Funds (NAPF) independent panel
inquiry suggests it's time UK institutional shareholders made more of an effort
to vote. Institutions may even be forced by law to vote at Company meetings
unless they radically overhaul voting methods.
The inquiry was set up last year by the NAPF after the government
voiced concern over the lack of involvement in corporate governance by major
shareholders. Only 40-45 percent of institutional shareholders deign to vote at
UK company meetings; the panel would like to see that rise to 60 percent. The
NAPF is also worried about votes being lost in the convoluted paper chase of
the current system, which it describes as 'ludicrously anachronistic'.
In fact, the panel's main recommendations are aimed at simplifying the
voting process to incentivise shareholders. In particular it suggests the
introduction of electronic voting.
Predictably, the report has sparked off debate. The NAPF
enthusiastically welcomes the findings, with Lynn Ruddick, the NAPF's committee
chair, commenting: 'The NAPF believes that implementation of the
recommendations will encourage responsible, considered voting.'
UK-based voting agency Manifest is less impressed and suggests an
emphasis on technological reform is misplaced. 'We feel that the logistical
problems are overstated,' says MD Sarah Wilson. 'Effective Systems are in
place, the key question is probably a cultural one: do funds want to vote? The
35 percent of institutions which currently do not vote need to see informed
voting as good business practice.'
Tony Little, head of corporate governance at London-based fund manager
Gartmore, stresses that his institution does pay a lot of attention to voting
but says the biggest concern is the cumbersome nature of the current system. He
strongly favours technological innovation. 'You're working with a lot of paper
in a very short period,' he says, noting that the current timescale often does
not allow for adequate discussions with the company in question once hard-copy
documents have been received. Electronic procedures could relax the pressure.
Investor Relations
August, 1999
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