UK - Paul Myners has recommended that the top 200 UK pension funds move to a more specific definition of share ownership.

“I conclude that, for institutional owners, registering title in the name of a nominee company with a specific designation has benefits in terms of the identification of ownership rights,” Myners said in a report on shareholder voting.

As part of the exercise, Myners commissioned a report from consulting firm Epona which showed that “designation” would be too costly for everybody.

But Myners found “that a move to designation, at say, the level of the top 200 pension funds and similarly other investment vehicles would yield considerable benefits in terms of voting transparency, audit trail and corporate governance for little incremental cost”.

Myners, the former chairman of Gartmore who wrote an influential report on institutional investment for the government in 2000, made the comments in a 44-page report for the Shareholder Voting Working Group.

“Whilst it may be more costly, designation also delivers advantages to the process for voting UK shares and is consistent with promoting quality dialogue and transparent governance.

“I, therefore, find myself disposed to designation from a governance and voting perspective, but accept that this is not a simple matter of black or white and that other issues have to be taken into account when clients choose the form of custody most appropriate to their requirements.”

Current rules permit a custodian to register clients’ investments in the name of a nominee company - as opposed to the clients’ own names.

Myners also made recommendations on voting policy, electronic voting, voting resolutions and the disclosure of polls and proxy votes.

Christine Farnish, chief executive of the National Association of Pension Funds, said of the report: “For some time pension fund trustees have expressed a clear wish to exercise their right to vote at the general meetings of the companies which they own.

“It is encouraging to see that, at last, serious steps are being taken to ensure that this wish can be translated into reality. Practical obstacles to the right to vote and the lack of a clear audit trail are not acceptable in the 21st century.”

Alan MacDougall, managing director of Pensions Investment Research Consultants, said: “PIRC has been calling for reform of AGM procedures and voting for a number of years and it is gratifying that many of our recommendations have been taken up by the Group. This report now paves the way for compulsory voting.”

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