For immediate release: Monday 14 March 2005

SHAREHOLDER VOTING PROCESS IMPROVES, BUT MORE TO BE DONE

Paul Myners has today published his progress report to the Shareholder Voting Working Group on his review of the impediments to voting UK shares – one year after his initial report.

The original report, in February 2004, outlined a comprehensive action programme to remove impediments to the process by which UK institutions vote their shares in UK companies. He concluded that electronic voting was the key to a more efficient voting system.

One year on, there is a high degree of confidence that the barrier has been broken.  Every FTSE 100 company now allows electronic voting or is taking steps to do so¹. Myners expects this increase to cascade rapidly into the next tier of companies by market capitalisation.

There has also been more use of electronic voting facilities by institutional investors over the year, although take up is still not universal and not all institutional votes are cast electronically.

A new issue requiring attention is the increase in stocklending and the impact this has on voting practices. When shares are lent, the voting rights transfer from lender to borrower. Myners believes this is something to which participants need to be alerted in order to ensure that economic interest and voting activity are aligned rather than subverted.  

Beneficial owners have an important role in driving the standards in the voting process. The expansion of reports under FRAG21/94 on fund managers’ and custodians’ internal controls to cover the voting process and the communication of stock positions and stock lent, should make a significant difference in involving owners. The ICAEW’s steps to redraft FRA21/94 in this respect are welcome.

To keep an eye on progress, Myners has agreed that he will review the situation in twelve months time. He commented:

“While it is encouraging to report a great deal of progress, there is still a lot of work which needs to be done. The system is by no means perfect and as long as we continue to hear stories of votes being lost due to clerical errors, improvements are necessary. It is incumbent on all participants to take the necessary remedial action.”

Report attached.

For further information please contact:
Paul Myners, Chairman, Shareholder Voting Working Group, 07734 020202
Liz Murrall, Senior Adviser – Corporate Governance, IMA,  020 7831 0898
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Notes to Editors:

1. At the end of 2004, 88 of companies in the FTSE 100 facilitated CREST’s electronic voting service, compared with 47 in 2003, and the remaining 12 have indicated that they will be taking the necessary steps to do so in 2005.
2. Paul Myners is independent non-executive Chairman of Marks & Spencer, The Guardian Media Group, Aspen Insurance and Chair of the Trustees at Tate.  He is also Chairman of the Shareholder Voting Working Group.
3. The Shareholder Voting Working Group (SVWG) was established in September 1999 as the first industry wide group to act as an advisory body identifying and resolving the constraints, deterrents and logistical problems that impede the voting process. The SVWG consists of representatives from the following organisations:

The Association of Private Client Investment Managers and Stockbrokers
The Association of British Insurers
The Association of Investment Trust Companies
The Association of Unit Trusts and Investment Funds
The Bank of England
The British Bankers Association
Countisbury Lodge
CRESTCo Limited
The Investment Management Association
ICSA Registrars’ Group
Investor Relations Society
Institute of Chartered Secretaries and Administrators
National Association of Pension Funds
Pensions Investments Research Consultants Ltd
ProShare
Unilever plc
University of Birmingham (Centre for Corporate Governance Research)
Department of Trade and Industry (Observer status only)