The Kay Review of - ICSA

The Kay Review
Department for Business, Innovation and Skills
Spur 2, Floor 3 1 Victoria Street
London
SW1H 0ET
By email: kayreview@bis.gsi.gov.uk
Dear Sir/Madam
The Institute of Chartered Secretaries and Administrators
16 Park Crescent, London W1B 1AH
Founded 1891. Patron Her Majesty The Queen
REGISTRARS GROUP
Michael Kempe
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
Direct Line: 020 8639 1234
E-mail: michael.kempe@capita.co.uk
The Kay Review of UK Equity Markets and Long-Term Decision Making – Call for Evidence
18 November 2011
The Institute of Chartered Secretaries and Administrators Registrars Group (the Group) represents the major
service registrars in the United Kingdom whose members are outsourced registrars for more than 99% of all
quoted companies in the UK. The three major Registrars are Capita Registrars, Computershare Investor
Services and Equiniti. The Group is responsible for formulating policy and best practice guidelines in all areas
relating to share registration.
The majority of the questions asked are outside our specific area of expertise but the Group wishes to comment
on Question 8:
8. The quality of engagement between institutional investors and fund managers and UK quoted
companies, and the importance attached to such engagement, building on the success of the
Stewardship Code.
We would particularly welcome evidence on:
a. whether the measures taken to stimulate engagement by investors with companies have been sufficiently
effective;
b. whether the corporate governance activities of asset management businesses are sufficiently integrated with
the decisions of fund managers.
Lord Myners, in his report to HM Treasury Institutional Investment in the UK: A Review (the Myners Report)
in March 2001 described the proxy appointment capture infrastructure as the ‘plumbing’ which underpinned
Annual General Meetings, the most visible and highest-profile point of engagement between issuers and their
shareholders. If one extends that analogy, the members of the Group are the plumbers who ensure that the
process works effectively, and that the shareholders’ proxy directions in respect of the resolutions tabled at
general meetings are accurately recorded and reported to the issuers. If a poll is taken (now the norm in the
FTSE100 and increasingly in the FTSE250), our members invariably play a central role in conducting the poll
count and providing a final set of voting figures to the issuer for the purposes of reporting in line with the
requirements of the Companies Act (section 341, Results of poll to be made available on website) and Listing
Rules (LR 9.6.18 Notification of shareholder resolutions). Where the voting at general meeting is conducted by
means of a show of hands, issuers are required under the UK Corporate Governance Code (E.2.2.

The Institute of Chartered Secretaries and Administrators
16 Park Crescent, London W1B 1AH
Founded 1891. Patron Her Majesty The Queen
REGISTRARS GROUP
Constructive Use of the AGM) to disclose the proxy votes lodged and recorded, typically with one of our
member registrars, both at the meeting and on a website post-meeting.
The Group worked closely with Paul Myners at his request so that he fully understood what can, at first sight,
appear a complex process and, after the publication of the report, were fully engaged in carrying out his
recommendations, engaging with other participants in the investment chain to improve the effective-running of
the process. To a large extent that has been successful, with a small but steady increase in the average levels
of proxy appointment/voting over the period, despite the increasing international investment base of UK quoted
companies, which might be expected to make the process more fraught. The members of the Group are
currently analysing the results of the 2011 AGM season (which peaks during March – July) to provide
comparative figures. This should be completed shortly, and will be provided as soon as possible.
The Group believes that the proxy appointment / voting process is working reasonably well but it could be
improved. Embedded preconceptions and misunderstandings occasionally inhibit the smooth working of the
existing process and the Group is just completing a piece of work describing the process which, again, will be
sent to you as soon as it is finished. This will be rolled out to investors, fund managers, and issuers (for
information) to improve understanding and transparency is intended to be the first step in a longer engagement
process to address these problems and improve effective levels of engagement.
We recognise that engagement is a long process, involving the annual report, assessment of it and the various
policies adopted by the issuer, including remuneration, the two-way communication between investors and
issuers and, finally, the investors' decision about voting on the resolutions put forward at the AGM. We would
not wish to overstate the importance of the one element with which the Group is directly involved but, equally,
would not wish the important practical aspect to be overlooked.
On the wider question of transparency (broader than the specific issues raised by Question 7), the Group has
responded to a number of previous consultations which we believe are relevant. Links to these responses are
provided below, together with a reference for the most applicable elements.
• Response to the European Commission consultation on the modernisation of the Transparency
Directive (15 – 16)
• Response to the European Commission consultation on the harmonisation of Securities Law (30 – 34)
• Response to the European Commission consultation on the EU Corporate Governance Framework
(15 – 20)
Questions 15 and 16 of the Transparency Directive response focus on the importance for good governance of
an issuer knowing who their shareholders are. Questions 30-34 of our response to the Securities Law Directive
consultation are pertinent in relation to how investors receive information in relation to their investments and
how they exercise their shareholder rights. Our response to questions 15-20 of the EU Corporate Governance
Framework consultation relate to the role and independence of asset managers, shareholder cooperation, and
once again the criticality of shareholder transparency for good governance.
Please do not hesitate to raise questions on any of points raised or request further information.
Yours sincerely
Michael Kempe
Chairman