There are many companies with a very diverse structure of the shareholders: institutional investors, retail investors and even schools, hospitals and churches and NGOs.
There are cases when shareholders resolutions are approved with a bit over 50% and management is happy with the results because the resolution is approved, even almost half of shareholders votes against.
UK, as a very experienced market used with activist shareholders, created a very useful practice. In 2018 the UK Corporate Governance code introduced the concept of the register of significant vote against a resolution proposed by the management of a listed company for shareholders’ vote.
As such, when 20 per cent or more of votes have been cast against the management recommendation for a shareholder resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders to understand the reasons behind the result. An update on the views received from shareholders and actions taken should be published no later than six months after the shareholders meeting. The management should then provide a final summary in the annual report and, if applicable, in the explanatory notes to resolutions proposed at the next shareholder meeting, on what impact the feedback has had on the decisions the board has taken, and any actions or resolutions now proposed.
In Romania and in Poland, some of the listed companies that are under high influence of a shareholder tend to ignore the opinion of other shareholders. There are cases when management of such companies have a direct communication with the ’influential’ shareholders and almost no communication with the rest of shareholders. If they keep the ‘influential’ shareholder and its employees on the insider list according to Market Abuse Regulation is another subject and the consequences may be very dangerous.
Valgreen prepares a public register noting significant votes ‘against’ expressed in the general meetings of the companies part of BET index of Bucharest Stock Exchange, organised in a similar way with UK register. This will be a help for investors to identify the main issues with companies listed on Bucharest Stock Exchange. There is still room for improvement and updates of the corporate governance codes are needed.
In the meantime, it would be nice for Romanian companies with international investors and companies listed on more than one stock exchange to start implementing the transparency measures as recommended by UK capital market, even the requirements are not mandatory.
Such a measure would encourage more shareholders to invest, to join general meetings and to vote.
A company belongs to all its shareholders, not to an influential shareholder or a group of shareholders or to the managers appointed by it / them.