RBS Agrees To Vote On Creation Of First UK Shareholder Committee

19th Mar 2018 14:50

LONDON (Alliance News) - Two shareholder groups said on Monday Royal Bank of Scotland Group PLC had agreed to put the creation of a shareholder committee to a vote at its annual general meeting in May.

ShareSoc and UK Shareholders' Association said the FTSE 100-listed and majority government-owned RBS had accepted their requisition for a debate and vote on the creation of a shareholder committee.

The resolution offers to "establish a shareholder committee, the members of which will include representatives of large shareholders willing to serve and a representative of retail shareholders."

The creation of such a committee would see retail investors gain more influence over the banking group, which also includes the NatWest and Ulster Bank brands. Should shareholders vote in favour of the resolution, RBS will be the first UK company to establish a formal shareholder committee.

The shareholder groups added the committee was likely to be "advisory in nature" as no "formal powers" have been stipulated in the special resolution. Nonetheless, the pressure groups emphasise, the committees could "comment on strategy, governance, executive pay and other high-profile issues."

ShareSoc Director & Resolution Campaign Coordinator Cliff Weights said: "The shareholder committee concept will allow a representative group of shareholders to interact with companies in a structured, consistent manner that builds trust and understanding between both sides. It will help to reduce unnecessary conflict while providing challenge when necessary. It will improve corporate governance by improving shareholder engagement and influence without diminishing the board’s ability to manage the business."

The proposal will have to get 75% shareholder support in order to pass as it is a special resolution. This is higher than the 50% threshold required for ordinary resolutions.

With the UK government - through its UK Financial Investments subsidiary - owning 70.5% of the shares in RBS it will "hugely influence" the outcome, ShareSoc and UKSA explained.

The shareholder organisation said the UKFI had agreed they would give the resolution "proper consideration". ShareSoc and UKSA, however, emphasised that the UKFI manages its shareholding at an "arms-length basis".

"This just could be the first step in restoring the rights of beneficial owners," UKSA Chairman John Hunter said. "Shareholder rights have been dangerously eroded by the over-dominant behaviour of asset managers and the nominee system which removes ownership rights. I call on all beneficial owners to lobby their fund managers to vote in favour of this resolution."

ShareSoc Chairman Mark Northway added: "I see this as a great opportunity for RBS to lead the rest of the UK towards better governance. We are very pleased that RBS has allowed this debate and is willing to consider the benefits of a shareholder committee. The initial role of any new committee is likely to be relatively low key but is likely to extent over time as the benefits of formal shareholder engagement are realised."

Shares in RBS were down 0.7% at 258.70 pence on Monday.

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