For immediate release: Tuesday 3 December 2002

THE IMA RESPONDS TO THE DTI'S WHITE PAPER

"MODERNISING COMPANY LAW"

The IMA has released its response to the Government’s White Paper, “Modernising Company Law”.   

The White Paper’s proposals are aimed at reducing the burden on smaller companies, whilst helping to improve the corporate governance of larger companies.   The IMA gave a broad welcome to them, including the key proposals which codify directors’ duties and make the Operating and Financial Review mandatory, but had reservations about some of the details, including the following:

• the proposal to reduce the notice period for the AGM from 21 to 14 days may not give shareholders sufficient time to consider the matters that need to be addressed;
• the proposals do not recognise that the parties that hold a company’s directors to account are not always the beneficial owners but in practice are the investment management firms that act on the beneficial owners’ behalf;
• although the proposals require quoted companies to publish their accounts on the internet within four months, those shareholders that do not have access to the internet are not considered and they may be disadvantaged; and
• the instances when the Government will have fall back powers to overrule the new Standards Board are not specified to ensure the Board’s ongoing effectiveness.

In addition, the IMA does not agree that it is in the public interest for institutional investors to disclose publicly how they have voted.  The IMA considers that such disclosure could undermine the voting process and, particularly if there is a disagreement, could have an adverse effect on shareholder value. 

Richard Saunders, IMA Chief Executive, said: 

“Broadly speaking the Government’s proposals point in the right direction, but some of them will not help shareholders to engage actively with company boards and hold them to account.  We believe the comments we have offered will help to correct that, and urge the Government to accept them.” 

A copy of the full response is attached. 

For further information, please contact: 

Richard Saunders, Chief Executive, IMA, 020 7831 0898

Clare Arber, Head of Communications, IMA, 020 7831 0898 

Notes for Editors 

65 Kingsway London WC2B 6TD 

Tel: +44 (0) 20 7831 0898 Fax:+44 (0) 20 7831 9975 

www.investmentuk.org 

Investment Management Association is a company limited by guarantee registered in England and Wales Registered number 4343737.  Registered office as above.