Investors are increasingly seeking proof that their votes have been recorded at General Meetings, in order to satisfy their obligations and concerns regarding corporate governance.
As a result, there is a growing demand for vote confirmation services to be developed across many global markets. Within the UK, the topic is being discussed over multiple strands:
- European Shareholder Rights Directive reform
- Local reform driven by the UK Shareholder Voting Working Group (SVWG)
- 'Pilot' vote confirmation exercise driven by members of the UN Principles for Responsible Investment (UNPRI) initiative
What's the problem?
Although the voting process may appear simple to those unfamiliar with the topic, the structure of the ownership chain and the different actors involved make it a complex challenge. Developing an effective end-to-end system of vote confirmation would be just as complicated, as the prevalence of intermediation means that confirmations can't be given directly to the end investor. Instead, these have to be passed back through the same channels used for lodgement of the instruction. Issues such as over-voting and atttendance in person can also create additional challenges.
The lack of existing infrastructure and current uncertainty, regarding the extent of investor demand and willingness to pay for vote confirmation, require further industry discussion and resolution, including through the SVWG and UNPRI initiatives.
European legislators seem determined to implement an obligation on issuers to deliver some form of confirmation. However there are many questions that have yet to be answered, including a clear definition as to what 'confirmation' actually means and the point at which it is provided (e.g. pre-meeting or post-meeting). In the context of the Shareholder Rights Directive, we are arguing that the text should be amended to leave scope for the current industry discussions to resolve some of the questions around vote confirmation. The issue of who should pay for any such service is also a critical one.
Our Global Capital Markets team has developed a discussion paper addressing the topic in more detail, which proposes a near-term solution. This would deliver acknowledgement of votes received electronically by the tabulator alongside consideration of more extensive 'user pays' vote confirmation services which would be subject to market demand. I would encourage you to become familiar with it and take part in the debate as it progresses.
I'll be discussing this topic in more detail in our webinar on 19 February, alongside our Head of Industry Relations Michael Sansom.
read the whitepaper