More than 20 percent of the UK’s largest public companies face protests by shareholders over the companies’ powers to raise funds without first seeking approval from shareholders, according to an analysis by the Financial Times newspaper.
At the most recent shareholder meetings, more than 10 percent of the vote at 23 of the members of the FTSE 100 was cast against resolutions allowing companies to raise funds without involving shareholders and the resolutions were supported by less than 60 percent of the shareholder base at two companies, the FT reports, citing its own data.
The numbers show companies face an uphill battle in passing resolutions that could allow them to sell new shares valued at as much as two-thirds of existing capital without holding a shareholder meeting to seek approval. Companies have increasingly sought such powers since the Association of British Insurers, which represents some of the largest investors in the UK, voiced approval of the resolutions, the FT says.
‘The context for annual meeting resolutions is that generally they are voted on by shareholders who have chosen to invest in the company and support the management,’ Paul Hewitt, European business development manager at proxy voting agency Manifest, told the newspaper. ‘If opposition goes up as high as one-third on what should be a routine matter, the company should take it seriously.’
The average negative vote for similar resolutions among companies in the FTSE 350 index is at 3.5 percent so far this year, and most resolutions receive favorable votes of 97 percent or more, the FT says.
The ABI originally said it approved of such powers in 2008 as banks sought to deal with the global financial crisis, but companies are increasingly saying they would like to have those powers now, even if they are unlikely to want to use them, according to the newspaper.
