For immediate release: Thursday 25 May 2006

VICTORY FOR COMMON SENSE AS HOUSE OF LORDS AMENDS COMPANY LAW REFORM BILL

The Investment Management Association (IMA) welcomed the House of Lords vote this week to delete a Clause in the Company Law Reform Bill which would have given the Treasury power to require institutional investors to disclose publicly how they vote at company general meetings.  The IMA supports transparency and welcomes the growing market trend towards greater disclosure.  But it believes that mandatory disclosure, enforced by Government regulation, would undo the progress that has been made in recent years. 

Richard Saunders, Chief Executive of IMA commented:

“The deletion of this Clause from the Bill is a victory for common sense.  A significant number of institutional investors are already voluntarily disclosing how they vote.  To make public disclosure mandatory would have the effect of dumbing down the voting process and lead to more mechanistic and less meaningful reporting.”

-Ends-

For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898

Out of hours contact:
Mona Patel, Head of Communications, IMA, 07834 089332

Notes to Editors
1.  Clause 876 gave the Treasury power to make regulations to require institutional investors to disclose information on the exercise or non-exercise of voting rights attached to shares in which they have an interest.  

2.  During the Third Reading Debate on the Bill in the House of Lords on 23 May, an Opposition amendment to delete the Clause was carried by a majority of 5.

3.  The IMA supports a regime where institutional investors are transparent about voting and disclose to their clients information regarding how they have voted.  The Institutional Shareholder Committee’s Statement of Principles states that

“…those that act as agents will regularly report to their clients details on how they have discharged their responsibilities.  This should include a judgement on the impact and effectiveness of their engagement.  Such reports will be likely to comprise both qualitative as well as quantitative information.  The particular information reported, including the format in which details of how votes have been cast will be presented, will be a matter for agreement between agents and their principals as clients”. 

4. IMA’s 2004 annual survey of fund managers’ engagement with investee companies found that 8 managers made voting information public by putting it on their websites, up from 2 in 2003.  Since the 2004 survey at least 3 more managers have started to do so.