On 12 December 2015, the Pensions and Lifetime Savings Association ("PLSA") published an updated edition of its Corporate Governance Policy and Voting Guidelines. These guidelines seek to reflect current market best practice as determined through consultation with PLSA members, and the aim of the guidelines is to assist members in promoting the long-term success of the companies they invest in and ensuring that the board and management of these companies are accountable to shareholders. The guidelines also aim to assist investors and proxy voting agents in their interpretation of the provisions of the UK Corporate Governance Code.
Key aspects which have been revised in this version of the guidelines include:
- An emphasis on the need for the company to articulate clearly how key tangible and intangible assets are engaged in the generation of sustainable value creation when reporting on strategic risk in accordance with Section C of the Code;
- A note that shareholders should be mindful of any concurrent directorships and other time commitments that non-executive directors and chairs may have;
- A comment on dividend policy disclosure, which the guidelines suggest should be specific enough to understand what the policy means in practice;
- A new requirement that companies should clearly signal, at their earliest opportunity, any intention they may have to undertake a non-pre-emptive share issue and to engage in dialogue with their shareholders about this;
- A statement that the board should provide investors with an understanding of the process used to identify when a share buyback is appropriate, the maximum price the company would be prepared to pay and the hurdle rate in respect of the buyback linking it to the overall capital management framework of the company; and
- New detailed voting guidelines on shareholder resolutions and the need for management to be available to engage with shareholders to facilitate an understanding of the rationale and merits of a resolution.
A copy of these guidelines can be found at:
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