Johannesburg - The JSE is looking at the possibility of requiring listed companies to reveal detailed results of voting at shareholder meetings.
The move would bring the local stock exchange into line with the requirements of the London Stock Exchange, and would provide some substance to attempts to hold corporate executives and institutional investors to account.
At present the JSE merely requires companies to report whether or not resolutions were passed. This totally inadequate requirement would have protected Lonmin from having to reveal the details of a veritable shareholder revolution at its annual general meeting (AGM) in January.
Because its primary listing is in London, Lonmin had to reveal the details of how many shares were voted for and against each resolution. In addition, it had to reveal how many shares abstained on each resolution.
In a statement reporting on the results of the AGM, Lonmin revealed that an unprecedented 45 percent of shareholders abstained from voting on resolutions relating to the election of the directors.
If the AGM results were based on 100 percent of the shares in issue rather than the number of shares voted, four of Lonmin’s eight directors would not have secured the 50 percent needed for election. The other four would have just scraped in with the necessary 50 percent.
If Lonmin was required to adhere only to JSE rules it would have been able to disclose that “all the resolutions were duly passed” without revealing the evident extent of discontent among shareholders.
The JSE’s current position undermines the effectiveness of the Code for Responsible Investing in South Africa (Crisa), which was recently adopted by institutional investors in a bid to promote the application of the UN’s Principles for Responsible Investment (UNPRI).
A key aspect of Crisa is an undertaking to disclose how institutional investors voted at shareholder meetings. One corporate governance analyst told Business Report yesterday that this information was of limited effect if the target company did not have to disclose the details of that voting.
He noted that given the controversial circumstances surrounding the platinum industry, it was particularly important to have details of shareholder voting.
A leading proponent of Crisa is the Public Investment Corporation, which manages around R1.3 trillion on behalf of government employees and pensioners and is the single largest investor on the JSE. Its commitment to the code is weakened by the erratic manner in which it publishes its voting record. Only this week did it reveal how it voted during the three months to June.
Its voting results for the first quarter of this calendar year, which were disclosed earlier this year, do not include details of how it voted its 10 percent stake at the Lonmin AGM.
Although Impala Platinum is not required to provide the detailed results of its shareholder meetings because it is only listed on the JSE, yesterday the company promptly provided the details of the AGM voting to Business Report.
All of Implats’ resolutions were passed, but the details reveal that there was significant opposition to the special resolution requiring approval of the new memorandum of incorporation. Some 1.7 million shares abstained and a further 110 million, or 22 percent, voted against the resolution.
Almost 18 percent of the shareholders voted against giving the directors control over the unissued share capital; 11 percent voted against the company’s long-term incentive plan and over 13 percent voted against the company’s remuneration policy.
Anglo American Platinum, which has merely disclosed that all resolutions at its April AGM were duly passed, had not provided Business Report with details of the voting by the close of business yesterday.
Earlier this week, John Burke, the head of listings at the JSE, told Business Report: “We’re looking at the issue.” - Business Report