The UK’s asset management trade body will no longer maintain a public log of meaningful shareholder opposition to company management at general meetings.
The Investment Association (IA) was asked to set up the so-called Public Register in 2017, by the then Conservative government, to keep track of companies in the UK FTSE All Share where more than 20% of shareholder votes had been cast against a resolution at an annual or extraordinary general meeting.
The policy was a response to public disgruntlement about executive pay levels combined with comparatively high instances of significant minority opposition to remuneration reports and policies, even though few were being rejected outright by shareholders.
The IA had suggested the idea of a register in a response to government corporate governance reform proposals, saying that a centralised, public list was important to “shed greater light on those companies that fail to secure significant support for their annual remuneration reports”.
The current Labour government, however, has asked for the register to be discontinued. In a ministerial statement last week by Blair McDougall, minister for small business and economic transformation, said discontinuing the Public Register would “remov[e] duplication with the UK Corporate Governance Code requirements”.
The UK corporate governance code, which was last updated in 2024, requires companies, where 20% or more votes are cast against a proposed resolution, to explain what actions it intends to take to consult shareholders.
‘Job done’
The IA’s Andrew Ninian, director for stewardship, risk and tax, said that during its lifetime, the public register “has achieved its intended purpose to embed practices that promote engagement between boards and shareholders, particularly where there has been significant dissent”.
“While the Register will no longer be updated, its objectives will continue to be met through disclosure against the UK Corporate Governance Code and ongoing stewardship activities. We remain committed to supporting effective engagement between companies and their shareholders and to promoting high standards of governance that underpin the UK’s global competitiveness.”
According to Tom Powdrill, a corporate governance specialist, the discontinuation of the Public Register should be viewed alongside other changes in the corporate governance sphere, such as the streamlining of the UK Stewardship Code and plans to scrap public disclosure of short positions.
“On their own, these aren’t necessarily massive changes, but in their totality, they indicate the government is open to lobbying for deregulation as part of its economic growth agenda,” he told IPE. “Taken together, they look like a reduction in transparency and accountability.”
The discontinuation of the IA’s Public Register was lobbied for by the Capital Markets Industry Taskforce (CMIT), a group headed by the chief executive officer of the London Stock Exchange that is aiming to boost London’s competitiveness as an international capital market.
The CMIT also wanted the UK’s Corporate Governance Code to be amended, saying the 20% vote against threshold was “arbitrary and distorting” and that the related requirement for stakeholder consultation reporting should be scrapped.
This summer a group of UK pension funds formed a campaign to try to shape the government’s reform agenda, saying that it would “shine a light on the evidence that effective corporate governance and shareholder rights help companies perform better by helping ensure they are well-run, transparent, and accountable”.
Read the digital edition of IPE’s latest magazine
