The IMA gave a 'broad welcome' but retained some key reservations about the Government's White Pa...
The IMA gave a 'broad welcome' but retained some key reservations about the Government's White Paper, "Modernising Company Law", released in July 2002, which is aimed at improving corporate governance.
The IMA has welcomed the key proposals which codify directors' duties and make mandatory the Operating and Financial Review, a narrative on a company's business, its performance and future plans.
But the IMA still holds reservations about some of the paper's details such as the reduction of the notice period for the AGM from 21 to 14 days which may not give shareholders enough time to consider the matters that need to be addressed.
The IMA also highlights that the proposals fail to recognise that the parties holding a company's director to account are not always the beneficial owners but in practice are the investment management firms acting on behalf of the beneficial owners.
The IMA calls for a Bill enhancing the power of proxies so that they can speak, vote on a show of hands and join with others in demanding a poll.
The proposals require quoted companies to publish their accounts on the internet within four months, but the IMA has thoughtfully pointed out that those shareholders without access to the internet would be disadvantaged.
The IMA notes that details regarding when the Government will have fall back powers to overrule the new Standards Board are not sufficiently specified to ensure the Board's ongoing effectiveness.
Finally, the IMA warns against making mandatory that institutional investors disclose publicly how they have voted. According to the IMA, disclosure could undermine the voting process and, particularly if there is a disagreement, could have an adverse effect on shareholder value.
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