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NEWS ROUND-UP |
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ICSA guidance on multiple proxies and other developments See CLM: ¶2032, ¶3727+, ¶3743, ¶3836+ |
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In response to changes introduced by the new Companies Act on 1 October, the Institute of Chartered Secretaries and Administrators (ICSA) has published new guidance covering voting by multiple proxies, amongst other things. See Issue 7 for details of the provisions of the new Act that were brought into force earlier this month. The new Companies Act now allows shareholders with more than one share to appoint a proxy for each share (s 324 CA 2006). Since each proxy has the right to attend, speak and vote, this could clearly disrupt the results of a vote taken on a show of hands by increasing a shareholder’s voting power. Therefore, ICSA recommends that the chairman should call a poll where multiple proxies have been appointed by any shareholder. Indeed, chairmen are under a duty to do so where it seems that the result on a show of hands would be different to that on a poll. This will still allow shareholders to appoint different proxies to exercise their voting rights in different ways where necessary, but will prevent a shareholder from trying to increase his voting power unfairly (which may be a risk where a dispute has arisen between shareholders, for example). The new Act also allows companies to choose to include a provision in their articles enabling shareholders to nominate another person to enjoy or exercise their rights (s 145 CA 2006). The guidance recommends that companies doing so should ensure that: » the wording of the relevant article(s) is clear and precise, for example setting out how the shareholder is to inform the company that he wishes to exercise this right and what information he needs to provide; and » the company has the administrative facilities in place to monitor who is entitled to enjoy or exercise rights attached to its shares. The guidance also highlights other provisions now in force which impact on the exercise of shareholders’ rights: » the ability to exercise rights in different ways where they are held on behalf of others (s 152 CA 2006); » the ability of a beneficial shareholder to join in certain shareholder requisitions (s 153 CA 2006); » the appointment of more than one corporate representative (s 323 CA 2006); and » the right of shareholders in listed companies to nominate the beneficial holders to receive information from the company (ss 146-151 CA 2006). This is only relevant for listed companies. This guidance note can be freely downloaded from ICSA’s website: http://www.icsa.org.uk/index.php. |
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Review of directors’ reports by the Financial Reporting Review Panel See CLM: ¶4245+ |
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The role of the Financial Reporting Review Panel (FRRP), the UK's corporate reporting and governance regulator, has been extended to include reviewing the directors' reports of public and large private companies as well as their annual accounts. This change in the FRRP's remit applies to reports for accounting periods starting on or after 1 April 2006. The FRRP will look at: » whether the business review is consistent with the accounts and any other material in the annual report; » whether the business review is balanced and comprehensive; and » whether the accounts and reports comply with the requirements of companies legislation and the applicable accounting standards. It will only look at whether the business review complies with the ASB's non-mandatory guidance “Reporting statement: operating and financial review” if the company states that it has voluntarily complied with that statement. In the case of any breach of the legislation, the FRRP can require the accounts or reports to be voluntarily revised by the company. In the rare case of a company refusing to do so, the FRRP can apply to the court for an order that they are revised (s 245B CA 1985). |