The Pensions and Lifetime Savings Association (PLSA) has published the latest version of its Corporate Governance Policy and Voting Guidelines. Principal changes include:
The addition of a new section on sustainability (section 13), which emphasises the importance of positive relations with key stakeholders to a company's long-term performance and highlights climate change as a key sustainability issue. Shareholders should consider voting against the annual report and accounts or the re-election of the chair where they believe that key stakeholder relationships are being neglected. A vote against the re-election of the chair should also be considered where shareholder attempts have failed to encourage companies in sectors affected by climate change to provide a detailed risk assessment and response to the effect of climate change on their business.
In relation to auditor appointment (section 6), where an auditor has been in place for more than 20 years, a vote against the audit committee chair and auditor should be considered. In addition, a vote against the re-election of the chair of the audit committee, the re-appointment of the auditor and/or the remuneration of the auditor should be considered where non-audit fees paid to the auditor exceed 50% of the audit fee in consecutive years without an adequate explanation being provided.
A vote against the re-election of the chair should also be considered where shareholder attempts have failed to encourage companies in sectors affected by climate change to provide a detailed risk assessment and response to the effect of climate change on their business.
Overall, the PLSA's review of the most recent AGM voting season reveals that shareholder dissent at FTSE 350 AGMs has remained at relatively similar levels over the past two years with approximately 20% of companies experiencing a vote of 20% or more on one item of business.
The Department of Business, Energy and Industrial Strategy has asked PwC and the London Business School to undertake research to understand whether some companies are repurchasing their own shares to artificially inflate executive pay, how companies use share buybacks, and whether action is needed to prevent buybacks from being misused. The findings are expected to be published later in 2018.
As previously reported, the government intends to establish a public register of beneficial ownership of overseas legal entities that own or buy property in the UK, or that participate in central government contracts. The government's UK Anti-corruption Strategy 2017-2022 identified this as one of the six priorities for the period to 2022. BEIS has now confirmed the government's intention to produce a draft bill in the summer of 2018 with a view to the register going live in early 2021.
The aim of the register is to prevent the use of shell companies to launder illicit proceeds by helping law enforcement agencies track criminal funds. In addition, the register should provide the government with greater transparency on overseas companies seeking public contracts.