For immediate release: Monday 14 November 2005

MOMENTUM IN IMPROVING THE VOTING PROCESS CONTINUES - MYNERS’ SECOND PROGRESS REPORT TO THE SHAREHOLDER VOTING WORKING GROUP

Paul Myners has today issued his second progress report to the Shareholder Voting Working Group (SVWG)¹ on his review of the impediments to voting UK shares.

Myners’ original report in 2004 outlined an action plan to address concerns that the system for voting UK shares was not operating as it should be in that votes were being “lost”.  Today’s paper looks at the progress made in the eighteen months since that report.

Clearly the momentum started in 2004 has carried on in 2005. The voting process is getting better.  As the process improves so does confidence in it, which in turn has helped increase voting levels from around 50% in 2003 to 61%².

One of Myners’ main recommendations was that electronic voting is key to improving the process and it is apparent that electronic voting is increasingly being used. In the six months to 30 June 2005, 42% of the FTSE 100’s issued share capital was voted electronically compared to 22% for the previous year³. Only two companies in the FTSE 100 did not allow electronic voting and both intend to in 2006. Similarly the number of meeting announcements made electronically has increased from 273 companies in the FTSE All Share for 2004 to 372 in the eight months to 31 August 2005⁴.  

Myners also reiterates the argument for taking votes at meetings by a poll rather than a show of hands. Although some have reservations about this, he considers the recently issued Company Law Reform Bill, which grants a reserve power to make regulations to require institutional investors to disclose how they exercised their votes, gives further weight to the arguments for polls in that it is not clear whether submitting a proxy would mean that the vote is exercised. 

The report notes that the progress achieved to date needs to continue and that, as the landscape is changing, other issues now need attention. Going forward, Myners will focus on transactions such as American Depository Receipts, Contracts For Difference and hedge funds, and their effect on voting. He wants to ensure that share ownership and voting rights are aligned.

Alongside, these issues Myners continues to highlight the need to encourage companies to facilitate electronic voting. He has asked IMA and ABI to circulate a list of those companies in the FTSE 350 which do not allow electronic voting to their members so that the matter can be raised at meetings. Myners also wants companies to monitor whether votes are being lost and to publish their findings.

Paul Myners, Chairman of the SVWG commented:

“I continue to be encouraged by the progress made to improve the system for voting shares. This momentum needs to continue and progress should be monitored. To this end, I would encourage issuers to trace votes and publish their findings in order to establish whether the system is operating effectively or whether votes are still sometimes lost. Corporate governance requires a high level of confidence in the integrity of the voting process. Voting failures are no longer acceptable.”

Paul Myners’ report to the SVWG is attached.

-Ends-

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. 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 group consists of the following organisations:

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

2. Analysis conducted by RREV.

3. Data from the Institute of Chartered Secretaries and Administrators, states in the six months to 30 June 2005 41.8% of the FTSE 100’s issued share capital was voted electronically and 16.3% was voted with paper compared to 21.7% and 39.7% respectively in 2004.

4. Figures from CREST.

 5. Paul Myners is currently Chairman of Marks and Spencer, the Guardian Media Group and Aspen Insurance Holdings Ltd, a member of the Court of the Bank of England and sits on the board of the Bank of New York. Paul has conducted a number of reviews on behalf of Government.