​​Welcome to your March round-up, where we bring you key dates and the latest industry highlights from the world of registry along with a market update provided by Geor​geson.

This month we cover:

Industry Update:

  • AGM Guidance
  • UK Listing Review 
  • National Security and Investment Bill
  • Quality of 'Comply or Explain' Reporting
  • Hampton-Alexander Review 
  • Major Shareholder Notifications
  • BlackRock Updates 2021 Proxy Voting Guidelines
  • Memo on executive remuneration and the COVID-19 pandemic
  • Corporate Climate Ambition
  • ESG Investment favours tax avoidance 
  • CEOs on fine line with pay and perks

Industry update

Over the last few weeks, we’ve seen some important guidance released by the ICSA: The Chartered Governance Institute, providing companies with information on how to conduct AGMs during 2021.  


The ICSA’s guidance note which is endorsed by the Government, the FRC and other industry and shareholder groups, provides companies with answers to several key questions. These include: 


How should companies prepare for meetings in 2021? 

Be flexible in your planning for meetings held after the 30 March. After this date ‘closed door meetings’ will not be permitted without new primary legislation which is highly unlikely at the time of writing. Factor in what may happen if lockdown measures are ended and a tiered system is re-introduced, or partial restrictions are in place on travel and gatherings. Consider how these factors might impact the ability to have physical attendance. 


Can the format of the meeting be changed at the last minute? 

The institute recommend that companies should address a potential format change within their notice of meeting, or at least guide shareholders to where to find such information. 


Are hybrid meetings permitted?

Such meetings are permissible, in the view of the Institute, so long as your articles do not explicitly forbid it. Either due to requiring attendees to be present at a physical location or through some form of prohibition on electronic participation. Remote participation in a hybrid meeting should be on the same basis as if physically attending in that attendees should be able to hear proceedings and be able to speak at them. 


How should questions be handled in a virtual environment? 

Functionality of systems being used must be considered as the ability to only ask questions through a chat function, is unlikely to equate to the ability to ‘speak’ or be ‘heard’. If your articles do not have specific provisions that allow communication in a different way a company would need to incorporate audio functionality. Companies are advised to seek their own legal guidance on what might be permitted under their Articles and would be sufficient to constitute a meeting adhering to all necessary legal requirements. 


To help you plan your 2021 shareholder meeting, we've created a Virtual Shareholder Meeting Checklist. This combines best practice and real-life client experiences, including managing over 2,000 virtual shareholder meetings globally in 2020.

If you need any assistance in understanding how technology can support remote participation by your shareholders, please contact your Client Manager and we’ll be happy to guide you through the possibilities.



​Lord Hill’s review of the UK’s listing regime has been published and contains a number of recommendations including:

• Premium listed companies should be permitted dual class structures to allow directors (particularly founder directors) enhanced voting rights;

• HM Treasury should conduct a review of the prospectus regime, including liability rules relating to forward-looking information, separation of regulated market admission and public offers; and

• Free-float requirements should be reviewed, with a view to lower the minimum absolute requirement to 15%.

Alongside these matters, a desire to increase empowerment of retail investors and the use of technology to allow retail investors better involvement in Corporate Actions are strong features of the report.




​The UK government has published their response to the consultation that sought views on the mandatory notification for specific sectors under the new national security screening regime.


The Bill is currently working its way through the House of Lords but is anticipated to come into force in the later part of Autumn 2021.

There were widespread concerns in relation to the original consultation that sector definitions proposed were too broadly drafted, and in many cases may not have been sufficiently specific to allow identification of when a transaction would fall within the scope of the new notification regime. The government have taken these views on board and published revised definitions for the 17 sectors and indicates a narrowing of the scope of the requirements.


The government are intending to further engage with the sectors to refine the description of acquisition prior to settling on the final definitions.


​The Financial Reporting Council have released guidance aimed at helping companies improve their ‘comply or explain’ reporting in respect of the Corporate Governance Code. 

A review has been conducted and identified that companies were not being transparent regarding their compliance with the Code. The review found some companies had been claiming full compliance, however upon further investigation there were departures from several provisions that had not been acknowledged. 

The guidance makes it clear that companies should be transparent in their declarations and provide meaningful explanations for departures. To assist with this the guidance lays out what a good declaration looks like and provides examples of what good looks like.

​The Review published their final report that notes the voluntary targets set five years ago to improve the representation of women in FTSE 350 boards have been met. 

• FTSE 100 companies met the target of 33% for female representation at the beginning of 2020 and the percentage of representation now stands at 36.2%, up from 27.7% in 2017. 
• FTSE 250 companies met the target of 33% at the end of 2020 and the percentage of representation now stands at 33.2%, up from 22.8% in 2017. 

The report welcomes this news but sees it as a clear call-to-action for other companies who have not yet met the threshold either in leadership or on the board to do more. This is because while the volume of female representation has increased in Chair and NED positions, there has been little change in executive director positions being held by women.

The Financial Conduct Authority have announced that they are changing the way in which major shareholder notifications are to be lodged. 

The FCA have been contacting all those who have submitted a notification (TR-1 Form) in the last 12 months up to November 2020 and asked them to register for the FCA’s Electronic Submission System (ESS). They have now confirmed that the new portal will go live on Monday 22 March and following that date all notifications should be submitted via the system rather than by email. 

To support this the FCA have published a registration guide.

Georgeson market update

Georgeson is a leading Corporate Governance advisory and Shareholder Engagement company, and part of the Computershare group

​In December 2020, BlackRock released its 2021 U.S. proxy voting guidelines, along with updated global principles that outline its 2021 stewardship expectations. Key changes to its U.S. proxy voting guidelines are discussed in the recent Georgeson report.

Read the full report here.

​Executive remuneration has always been a topic of focus among institutional investors, proxy advisors and other shareholder-led organisations. In the context of the socio-economic and health crisis we are experiencing, the issue continues to be a pressing on in corporate governance circles in Europe and UK.

If you would like to receive a copy of the memo, please email daniele.vitale@georgeson.com.

​Climate Action 100+ investors to raise corporate climate ambition for 2021 proxy season

“Largest investor engagement initiative flags key shareholder votes focusing on corporate governance on climate change, emissions target setting, and disclosure of business plans aligning with the transition to a net zero emissions future.”

​The Financial Times reports that ESG investment favours tax avoiding tech companies

"The huge rise in environmental, social and governance-based investing is funnelling money into companies that pay less tax and provide fewer jobs than many counterparts with lower ESG ratings, analysis shows."

​Reuters reports that investors warn CEOs on pay and perks ahead of UK AGM season 

“Companies have to walk a very fine line (in terms of) variable compensation given that, of course, executives will have worked very, very, very hard in 2020, but maybe the results and the performance ... do not reflect that.”


  

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