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Shaftesbury plc has reported 3 resolutions failed to pass at its AGM on 31 January 2020, with a further 5 resolution receiving votes against them from 20% or more shareholders (significant no votes).
This result comes after major shareholder, Samuel Tak Lee, commenced legal proceedings against Shaftesbury back in June 2019 stating that the board had ‘acted in breach of their directors duties’ regarding a pre-emptive share issue in 2017, which Mr Lee claims was for ‘improper purposes’. Prior to the AGM, the Hong Kong billionaire announced his intentions to vote against special resolutions 15, 16 and 17, preventing the board from undertaking further share issues, whether on a pre-emptive basis or otherwise. Due to his controlling interest of 26.1%, Mr Lee was able to block all 3 of these resolutions despite little support from fellow shareholders.
Further to this, due to continued concerns that ‘Shaftesbury is not being managed properly in the best interest of its shareholders’, Mr Lee also called for shareholders to vote against the re-election of the CEO, finance director and Chair, as well as resolutions approving the remuneration report and authorising directors to call a general meeting on less than 14 clear days’ notice. As these were ordinary resolutions requiring a 50% majority to pass, Mr Lee required support from fellow shareholders to successfully block these. These resolutions were passed at the AGM, despite significant no votes. Whilst the majority of these no votes were attributed to Mr Lee’s own 26.1% stake, there did however, appear to be some support regarding his concerns, as the re-election Chair, Jonathan Nicholls, received the most dissent with 32.77% with the resolution regarding calling a general meeting also receiving 31.6% no votes.
The board have disputed Mr Lee’s allegations stating they have ‘no merit’. Trial is expected to commence in 2021.
While Shaftesbury’s legal proceedings make this a unique situation, Market Tracker has noted that shareholder dissent, particularly towards the re-election of directors is not uncommon. In the 2019 AGM season, our research found that re-election of directors was the most commonly voted down resolution, accounting for 41% of all resolutions receiving a significant no vote. This trend appears to have continued into the 2020 season, with 35% of companies receiving a significant no vote so far this season* experiencing dissent against the election/re-election of directors.
Britvic PLC’s 2020 AGM on 31 January also saw two instances of significant no votes. Prior to the AGM, shareholder advisory firm Glass Lewis had expressed concerns regarding director’s remuneration, advising shareholders to vote against the remuneration report. Despite this, the resolution only received 15% no votes, with shareholders instead focusing their attention on the board itself. Two of the directors up for re-election received significant no votes, including senior independent director (SID), Ian McHaul, whose role includes acting as a sounding board to the chair. Both Mchaul, who received 20.8% no votes, and fellow director, William Eccleshare, whose re-election also saw opposition with 25.9% no votes, are also members of the remuneration committee.
The board addressed the discontent noting ‘the concerns relate to calls on their time’ and stating that ‘All Directors currently comply with best practice and their time commitments is a matter that the Nominations Committee keeps under regular review’. Mchaul holds several key external appointments, including Chairing Vitec group plc and chairing the audit committee for both Bellway plc and Young & Co’s brewery plc. Eccleshare is a non-executive director and SID for Centaur Media plc. In line with the UK corporate governance code, ‘The Company will continue to consult with shareholders who did not vote in favour on these resolutions and will provide an update within six months’.
*The 2020 AGM season is defined as a company whose financial year end is between April 2019 and March 2020 (excluding closed ended investment funds).
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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