The resolution, to be proposed at RBS’ AGM later this year, was proposed by 168 shareholders last December and is being coordinated by the ShareSoc, the UK Individual Shareholders Society and UKSA, the UK Shareholders’ Association. The initiative is focusing on RBS, which is 70% owned by the government, because since its near collapse in 2007, long term investors have lost 95% of the value of their investment, largely due to failures in corporate governance.
However, RBS, which received the resolution at the end of December, rejected the resolution in February. In a recent meeting between ShareSoc and the company, RBS confirmed it would not back down from down from its objections to the resolution being proposed at the AGM. The company said that it believes the resolution is inconsistent with the law as it breaches section 172 of the Companies Act as well as being inconsistent with the company’s articles, by dint of being too broadly drafted.
However, ShareSoc said, “We are trying to stop this unreasonable obstruction of shareholder democracy. It is a basic principle of Company Law that shareholders can requisition resolutions which must be put to a vote of shareholders. If the directors do not like a requisition, then they can advise shareholders to vote against it. But they should not be using tenuous technical excuses to avoid putting it to shareholders.”
ShareSoc Chairman Mark Northway: “It is disappointing that, instead of leading from the front on corporate governance, RBS have instead chosen to try to thwart this initiative.”
ShareSoc director Cliff Weight, who is also a non-executive director of Manifest, is leading the shareholder campaign. In the latest update to the shareholders supporting the resolution, he said he had met with Jan Cargill, head of governance at RBS, and Penny Hughes, a non-executive director who chairs the sustainable banking committee, whose remit includes shareholder and other stakeholder engagement. Weight said that if shareholders wished to voice their disapproval at RBS’s decision they could write directly to Cargill and ask that their communications be sent onto RBS chairman, Howard Davies.
Weight added that ShareSoc would be lobbying the government, MPs and institutional investors to encourage RBS to change its mind. ShareSoc is also considering taking legal steps to force RBS to comply.
ShareSoc has pointed out the government’s corporate governance green paper included a proposal for companies to create shareholder committees as part of its desire to see UK PLC behave in a way that better reflects the long‐term interests of shareholders and of stakeholders generally.
Weight wrote: “This same government currently owns 73% of RBS. And yet the board of RBS has rejected, on spurious grounds, a properly requisitioned shareholder resolution proposing the creation of a shareholder committee (one of the proposals contained within the Green Paper). Some joined up thinking is needed here, and the boards of UK PLC, most particularly that of RBS, clearly need to be made to understand whose interests they represent.”
ShareSoc has been an advocate of shareholder committees since its establishment in 2011 and suggests they could be a vehicle for other stakeholder representation – such as employees – as well.
Manifest Independence Statement:
Cliff Weight is a director of both ShareSoc and Manifest however, in line with Manifest’s non-independent research principles, Manifest would not be making a recommendation either for or against the ShareSoc resolutions should it appear on the agenda.