First the corporates. Here's a bit of the GC100 response to last year's FRC consultation on the Stewardship Code covering shareholders' use of proxy advisers -
we believe that material institutional investors (holding above 1%) who have signed-up to the Stewardship Code should disclose the extent to which they rely on the services provided by proxy advisors. Furthermore, material institutional investors should be required to engage directly with issuers prior to lodging their votes in the event that they intend not to support the company’s resolutions.Here's BT on the same point -
we believe that institutional investors who have signed-up to the Stewardship Code should disclose the extent to which they rely on the services provided by proxy advisors. In addition, institutional investors with a material holding (i.e. a voting interest of 1% or above in a company) who have signed up to the Stewardship Code, should be required to engage directly with issuers prior to lodging their votes, to the extent that they intend not to support the company resolutionsAnd this is from Smith & Nephew -
a requirement for shareholders holding in excess of 1% to engage directly with the issuer if they intend to vote against or withhold their vote.This is just one example from an initial skim. I have found that there are usually more bits of identical text, I just haven't had time (yet) to do a proper comparison.
Also, here's a bit from the Hundred Group's response (representing FTSE100 FDs).
A requirement that investors should not rely on the services of proxies where they own a significant holding in a company – we suggest a threshold of 1% of the voting capitalNot the same text, obviously, but the policy idea (1% threshold for being active engaged) is the same which may, or may not, be significant.
The FRC also consulted at the same time on audit committee guidance. Here the similarities in the text are a lot clearer. Again these are just snippets from an initial search
In reality, a “fair, balanced and understandable” approach is already the default position for companies when publishing their annual reports. The rationale for this proposal still does not appear to be clearBT
...in our view, a “fair and balanced” approach is already the position companies take in preparing their annual reports. The rationale for this proposal still does not appear to be clear.”Hundred Group
[This] may lead to the unintended consequence of creating an implied reliance by other Board members on the Audit Committee’s review and hence reduce the scrutiny of the Annual Report by other Board members with relevant knowledge and expertise.”Rolls Royce
We consider that it may have the unintended consequence of creating an implied reliance by other board members on the audit committee’s review and hence reduce the scrutiny of the annual report by other board members with relevant knowledge and expertise.As an aside, it's sort of interesting, isn't it, that different PLCs choose different representative groups' text? (I am assuming that the GC100/Hundred Group responses come first, not the PLC ones).
When I get a bit of time, I'll go into more depth on all these. To be honest, I'm getting a bit enured to this now. From what I have seen this is happening across the board, to consultations on governance issues ranging from the FRC, to BIS, to the Competition Commission and who knows where else. I think we have to work on the assumption that PLCs are happy to adopt a party line, and throw their individual weight behind it rather than just relying on their representative groups. This bothers me, as we all know how twitchy politicians get about annoying PLCs.
Finally, there are couple of investor groups at it too. Here's what the International Corporate Governance Network had to say about "fair, balanced and understandable" reports -
ICGN members agree with the Code’s main principle that the board should present an annual report that is a fair, balanced and understandable assessment of the company’s position and prospects. As mentioned under Code provision C.1.3, the directors should also consider the basis on which they consider that the annual report provides the information necessary for users to assess the company’s performance, business model and strategy. Requiring boards to state these points in the annual report also reinforces these responsibilities. However, some of our members are concerned that these points could add to clutter without necessarily adding any meaningful disclosure. It could also result in standardised reporting on the process followed as opposed to more informed disclosures on how reliable the information is. There are also many types of user. The primary audience of accounts should be the holders of ordinary shares, as the providers of the risk capital and bearers of the residual risk.And here's what the IMA said on the same point -
It is important that an annual report is fair, balanced and reasonable. However, for boards to be required to state “the basis on which” they believe the annual report is so and provides users with information to assess the company’s performance, business model and strategy is likely to add clutter without necessarily enhancing transparency. Such disclosures could also become standardised on the process followed, as opposed to being informed disclosures on how reliable the information is, and certain of our members consider they would blur accountabilities and responsilbities between directors and auditors. There are also many types of user. We maintain that the primary audience should be the holders of ordinary shares, as the providers of the risk capital and bearers of the residual risk. Whilst reporting is expected to meet a growing set of needs and some consider it should also be aimed at other stakeholders, such as creditors, employees, bankers, customers and suppliers, these other stakeholders are protected by contractual and other rights that are not shared by shareholders.Got to say the fact that the concern expressed about "standardised reporting" is almost identically worded did make me chuckle.
And a bit more. ICGN -
The company’s interaction with the external auditor should be overseen by the audit committee of the board on behalf of the shareholders. The audit committee seeks to assure itself and shareholders of the quality of the audit carried out by the auditors as well as overseeing their independence. Whilst audit committees may have a responsibility to advise the board on the financial reporting framework and controls adn assurance over that framework, it remains the board’s responsibility to whether the annual report is fair, balanced and understandable. The annual report should also provide the information necessary for users to assess the company’s performance, business model, strategy and business risks. Though we stress, it is the full board that maintains the liability and accountability for ensure the integrity of financial reporting and for the annual report overall. Proposals for the committee to advise the board on the entire annual report could be seen as a delegation of power. It also places a further burden on the audit committee and does not take into account that some companies have committees that deal with particular aspects of the annual report such as risk committeesIMA -
IMA considers it important that the audit committee does not undermine the role of the unitary board and its responsibility for the annual report overall. This proposal could be seen as a delegation of power. It also places a further burden on the audit committee and does not take account of the fact that some companies have committees that deal with particular aspects of the annual report such as risk committees. The audit committee should remain within its remit and focus on financial reporting, controls around that reporting, and the role and work of the internal and external auditors. It should report to the board to enable the board to exercise its responsilbities but only on these matters. Similar concerns apply to the related proposals in the Guidance to Audit Committee.