AGM Alert 2015 client guide published

We have published our AGM Alert 2015 guide to changes in law and practice over the last year which affect the AGMs of UK premium-listed companies.

In 2014, companies were kept busy working through new requirements which re-organised annual reporting and brought in new remuneration approvals. This year, most companies should be able to concentrate on consolidating their approach to recent reforms and changes to AGM business, procedures and reporting will be limited. One exception is premium-listed companies with a controlling shareholder which need to take account of the May 2014 Listing Rule changes which affect their AGM voting and information.

Some key points for all premium-listed companies

AGM business and procedures

  • Quoted UK companies must include an advisory vote on the annual report on pay in this year’s AGM business but most should not need to obtain approval for the remuneration policy.
  • Updated investor guidance on share capital management has largely endorsed standard AGM practice for share capital authorities. 
  • Companies may wish to update their articles, but are not required to do so.
  • When announcing vote results, companies are encouraged under the revised UK Corporate Governance Code to respond to significant votes against any resolution. Market practice on what level of dissatisfaction counts as “significant” is not yet settled.

Company reporting

  • For most companies, annual reporting requirements are unchanged from 2014, unless they choose to pre-comply with the 2014 changes to the UK Corporate Governance Code.
  • From January 2015, companies must put their audit contracts out to tender every ten years and tell shareholders when they intend to do so.
  • Financial institutions will face additional country-by-country reporting obligations in 2015.

Directors’ remuneration

  • Companies must consider how much detail about the agreed remuneration policy should be included in this year’s remuneration report, given differing investor expectations.
  • Reporting on policy implementation should have regard to updated investor guidelines, particularly in relation to maximum pay, disclosure of performance targets and any discretions.
Key points for controlled companies

The following points also apply to premium-listed companies which are 30 per cent controlled by one shareholder or group of shareholders.

  • Under the new FCA rules, controlled companies must have their independent directors elected or re-elected by a majority vote of the non-controlling shareholders, as well as being approved by the shareholders as a whole. Controlled companies, therefore, must decide how to obtain these approvals and whether they also need to amend their articles, although this is unlikely to be the case. 
  • Separately, the AGM circular must contain information about any relationship between a proposed director and the company or its directors or controlling shareholder, why he or she is considered effective and independent and how he or she was selected.
  • The annual report must also contain certain disclosures about the mandatory relationship agreement with the company’s controlling shareholder.