FRC Welcomes Shareholder Voting Proposals

FRC PN 104 14 March 2005

The Financial Reporting Council today encouraged listed companies to offer shareholders the facility to withhold their votes, rather than simply voting for or against motions at the Annual General Meeting.

In January 2004, Paul Myners recommended in a report to the Shareholder Voting Working Group that the FRC consider amending the Combined Code on Corporate Governance to require companies to offer a ‘vote withheld’ box on proxy forms for votes at the AGM. Mr Myners today issued a progress report showing that 85% of the FTSE 100 and 50% of the FTSE 250 company meetings provided such a facility in 2004.

Welcoming the progress report Sir Bryan Nicholson, Chairman of the Financial Reporting Council, said:

“The FRC will be carrying out the first formal review of progress in implementing the new Combined Code later this year, following which we will consider whether to recommend any changes to the Code. If we do so there will be full consultation on any proposals.

In the mean time it is good to see many companies voluntarily offering a ‘vote withheld’ option on proxy forms, and I would encourage others to do so. It is a useful facility that gives shareholders the opportunity to register that they have concerns without going so far as to vote against the motion. But as with votes against, it should not be seen as a substitute for constructive dialogue between shareholders and the board”.