RI Governance & Engagement, Dec. 8: Australian govt looks at role of AGMs

RI’s regular round-up of governance and engagement news

The Australian government is looking at the future of the annual general meeting (AGM). David Bradbury, Parliamentary Secretary to the Treasurer, has asked the Corporations and Markets Advisory Committee (CAMAC) to look into the risks and challenges presented by new technology and globalization. “It is timely to assess the role of the AGM as a part of broader shareholder engagement,” Bradbury said in a letter to CAMAC Convenor Joanne Rees. Link
South Africa’s R930bn (€85.9bn) Government Employees Pension Fund (GEPF) will “discreetly” question the heads of the country’s major companies about why they are not on the Johannesburg Stock Exchange’s socially responsibility index, according to reports. “If we are not satisfied…other approaches may be adopted,” GEPF’s environment, social and corporate governance manager Adrian Bertrand was quoted as saying by Business Day.

A new edition of the Italian Corporate Governance Code has been announced by exchange group Borsa Italiana. It sets out best practices in line with international markets on a comply or explain principle; amendments cover board composition and operation. It comes into force by the end of the 2012 fiscal year.

France’s Association for Private Companies (AFEP) and Movement for French Enterprises (MEDEF) have published their third annual report on the application of the corporate governance code for France’s SBF120 largest companies. (In French) Link

GMI Ratings, the US corporate governance firm, has released its final report in its ‘Say on Pay’ series, analysing the frequency of advisory votes collected from SEC filings at more than 2,176 companies in the Russell 3000 index. It found that 72% of shareholders voted to have input on compensation. Link
Phitrust, the French activist fund manager, says it will ask France’s banks and financial groups in the CAC40 index to communicate their policy on stock lending to check on their internal control procedures and verify how loaned stock is being used for voting at shareholder annual general meetings. The fund manager said it would be asking specific questions about the policies of SRI mutual funds within French asset managers.

The Association of British Insurers has written to all UK-listed banks called for an overhaul of the way they determine bonuses. It can no longer be “business as usual” for banks when they decide how much to pay out, the ABI said. Otto Thoresen, ABI’s director general, said: “It is essential that all banks take, and are seen to take, a responsible approach.“Eumedion, the Dutch corporate governance forum, says it is not in favour of the proposed European financial transaction tax (FTT). The group, whose members include about 70 institutional investors with more than €1trn in assets under management, said: “We have serious doubts…as to whether the said goal of the proposed directive will actually also be achieved.” Link

The United Arab Emirates has approved a draft companies law which will make corporate governance mandatory, according to reports. It sets up a general framework for public joint-stock companies to ensure the rights of all stake-holders, transparency, and disclosure of financial statements, and the “efficiency and integrity” of boards, said a report in Gulf News.

Novethic, the French ESG media and research group, has issued a report on ESG practices across Europe. The report shows that between 2010 and 2011, two major motivations to integrate ESG criteria grew in importance: the contribution to sustainable development rose from 46% to 51% and long- term risk management gained 6 points to reach 25%. Fifty-three percent of respondents said all issuers should be subject to ESG analysis for a better understanding of risks and opportunities. Link

The Singapore Exchange (SGX) has signed a deal with Broadridge Financial Solutions to introduce a new service aimed at bringing “greater transparency, accuracy and efficiency” to shareholder communications and proxy voting in Singapore. They said the proxy voting process would be dramatically streamlined by the introduction of shareholder-specific communications.

UK funds giant Legal & General Investment Management (LGIM) has said it will use its voting power to force companies to improve board diversity. “There will come a point that we have to vote against chairmen,” said Sasha Sadan, LGIM’s director of corporate governance. He was quoted by Reuters as saying: “A few large shareholders get together and discuss it with the companies, and things do change.”

Institutional investors including the Public Employees’ Retirement Association of Colorado, Relational Investors and the Caisse de Depot et Placement du Quebec, cut their holdings of mining firm Freeport-McMoRan Copper & Gold Inc. during the third quarter, according an item in the Wall Street Cheat Sheet.