20th Mar 2007 13:49
Schroders PLC20 March 2007 20 March 2007 Schroders plc Proposed amendments to Articles of Association Note: Sections of text that have been deleted are indicated by (DEL:text:DEL) Schroders plc (the "Company") announces, pursuant to Disclosure and TransparencyRule 6.1.2, that amendments to Articles 13, 54, 84, 89, 99, 103, 104 and 146 ofits Articles of Association, together with consequential re-numbering andcross-referencing amendments, are proposed for consideration by shareholders atits Annual General Meeting to be held on Tuesday 24 April 2007. The text ofeach of those Articles, highlighting the proposed amendments, is set out in theattached schedule. The Company's Articles of Association were adopted in 2000 and last amended inApril 2004. Since then the coming into force of the Companies (Audit,Investigations and Enterprise) Act 2004 has made certain amendments to theCompanies Act 1985 to clarify the circumstances in which a company may indemnifyits directors against liabilities incurred by them and to permit a company tofund a director's expenditure on the defence of legal proceedings in certaincircumstances. Amendments to Articles 99 and 146 of the Company's Articles ofAssociation are being proposed so as expressly to provide, respectively, for thefunding by the Company of a director's defence proceedings and for theindemnification by the Company of any director or any director of any companyassociated with the Company (being, in practice, any UK subsidiary of theCompany), in each case to the extent permitted by company law. If approved by shareholders, the amendment to Article 99 will give the Companyexpress permission to fund a director's expenditure in defending any criminal orcivil proceedings and to do anything to enable a director to avoid incurringsuch expenditure, as provided by company law. It will also give the Companyspecific permission to fund a director's expenditure in defending himself inregulatory investigations or actions, as provided by company law. The CompaniesAct 2006 makes specific provision for the funding of directors' expenditure onthe defence of regulatory investigations and actions, although the relevantsection of that Act has not yet been brought into force. The proposed amendment to Article 146 will have the effect of simplifying theprovision in the Company's Articles of Association for the indemnification ofdirectors. The existing Article 146 (Indemnity of Officers) provides forautomatic indemnification by the Company of its directors and other officers(other than its auditors) in certain limited circumstances, as well aspermitting the Company to indemnify such officeholders more broadly to theextent permitted by company law. The automatic indemnification provision willbe removed if the proposed amendment to that Article takes effect. The proposedamendment to Article 146 will also remove the existing provision in theCompany's Articles of Association for the indemnification of officers other thandirectors and auditors, on the basis that, following the coming into force ofthe Companies (Audit, Investigations and Enterprise) Act 2004, there are now nospecific company law restrictions on the indemnification of such officers. Ifthe amendment to Article 146 is approved by shareholders, it is proposed thatthe Company grants specific deeds of indemnity to each of its directors and itscompany secretary in place of the automatic indemnity, as more particularlydescribed in the Directors' report contained in the Company's Annual Report &Accounts 2006. In addition, it is proposed to delete Articles 84 and 89 in their entirety.Section 293 of the Companies Act 1985, which provides for an age limit of 70 fordirectors, is to be repealed as from 6 April 2007. Article 84 excludes theoperation of that section and, to the extent it does, is therefore superfluous.Article 84 also provides for the board, when convening a general meeting atwhich a director will be proposed for appointment or reappointment who at thedate for which the meeting is convened will be 70 or over, to give notice of thedirector's age in the notice convening the meeting or in any documentaccompanying the notice. In light of the forthcoming repeal of section 293, thedirectors consider this provision to be unnecessary. Article 89 provides for adirector to retire if he or she has reached the age of 70 or over at the date ofan annual general meeting. In light of the Employment Equality (Age)Regulations 2006, the board considers it inappropriate to retain this provision. It should be noted that, in accordance with the provisions of the Combined Code,non-executive directors who have served at least nine years on the board, aresubject to annual re-election. Minor amendments are also proposed to Articles 13, 54, 103 and 104 to takeaccount of developments in market practice or which are of a technical ordrafting nature. Certain consequential re-numbering and cross-referencingamendments are also proposed. SCHEDULE 13. Suspension of Rights Where Non-Disclosure of Interest (A) Where the holder of any shares in the company, or any otherperson appearing to be interested in those shares, fails to comply within therelevant period with any statutory notice in respect of those shares or, inpurported compliance with such a notice, has made a statement which is false orinadequate in a material particular, the company may give the holder of thoseshares a further notice (a "restriction notice") to the effect that from theservice of the restriction notice those shares will be subject to some or all ofthe relevant restrictions, and from service of the restriction notice thoseshares shall, notwithstanding any other provision of these articles, be subjectto those relevant restrictions accordingly. For the purpose of enforcing therelevant restriction referred to in sub-paragraph (iii) of the definition of "relevant restrictions", the board may give notice to the relevant memberrequiring the member to change the relevant shares held in uncertificated formto certificated form by the time stated in the notice. The notice may alsostate that the member may not change any of the relevant shares held incertificated form to uncertificated form. If the member does not comply withthe notice, the board may authorise any person to instruct the Operator tochange the relevant shares held in uncertificated form to certificated form. (B) If after the service of a restriction notice in respect ofany shares the board is satisfied that all information required by any statutorynotice relating to those shares or any of them from their holder or any otherperson appearing to be interested in the shares the subject of the restrictionnotice has been supplied, the company shall, within 7 days, cancel therestriction notice. The company may at any time at its discretion cancel anyrestriction notice or exclude any shares from it. The company shall cancel arestriction notice within 7 days after receipt of a notice in writing that therelevant shares have been transferred pursuant to an arm's length sale. (C) Where any restriction notice is cancelled or ceases to haveeffect in relation to any shares, any moneys relating to those shares which werewithheld by reason of that notice shall be paid without interest to the personwho would but for the notice have been entitled to them or as he may direct. (D) Any new shares in the company issued in right of any sharessubject to a restriction notice shall also be subject to the restriction notice,and the board may make any right to an allotment of the new shares subject torestrictions corresponding to those which will apply to those shares by reasonof the restriction notice when such shares are issued. (E) Any holder of shares on whom a restriction notice has beenserved may at any time request the company to give in writing the reason why therestriction notice has been served, or why it remains uncancelled, and within 14days of receipt of such a notice the company shall give that informationaccordingly. (F) If a statutory notice is given by the company to a personappearing to be interested in any share, a copy shall at the same time be givento the holder, but the failure or omission to do so or the non-receipt of thecopy by the holder shall not invalidate such notice. (G) This article is in addition to, and shall not in any wayprejudice or affect, the statutory rights of the company arising from anyfailure by any person to give any information required by a statutory noticewithin the time specified in it. For the purpose of this article a statutorynotice need not specify the relevant period, and may require any information tobe given before the expiry of the relevant period. (H) In this article: a sale is an "arm's length sale" if the board is satisfied that itis a bona fide sale of the whole of the beneficial ownership of the shares to aparty unconnected with the holder or with any person appearing to be interestedin such shares and shall include a sale made by way of or in pursuance ofacceptance of a takeover offer and a sale made through a recognised investmentexchange or any other stock exchange outside the United Kingdom. For thispurpose an associate (within the definition of that expression in any statuterelating to insolvency in force at the date of adoption of this article) shallbe included amongst the persons who are connected with the holder or any personappearing to be interested in such shares; "person appearing to be interested" in any shares shall mean any person named ina response to a statutory notice or otherwise notified to the company by amember as being so interested or shown in any register kept by the company underthe Companies Acts as so interested or, taking into account a response orfailure to respond in the light of the response to any other statutory noticeand any other relevant information in the possession of the company, any personwhom the company knows or has reasonable cause to believe is or may be sointerested; "person with a 0.25 per cent. interest" means a person who holds, or is shown inany register kept by the company under the Companies Acts as having an interestin, shares in the company which comprise in total at least 0.25 per cent. innumber or nominal value of the shares of the company (calculated exclusive ofany shares held as treasury shares), or of any class of such shares (calculatedexclusive of any shares of that class held as treasury shares), in issue at thedate of service of the statutory notice or the restriction notice (as the casemay be); "relevant period" means a period of 14 days following service of a statutorynotice; "relevant restrictions" mean in the case of a restriction notice served on aperson with a 0.25 per cent. interest that:- (i) the shares shall not confer on the holder any right to attend orvote either personally or by proxy at any general meeting of the company or atany separate general meeting of the holders of any class of shares in thecompany or to exercise any other right conferred by membership in relation togeneral meetings; (ii) the board may withhold payment of all or any part of any dividendsor other moneys payable in respect of the shares and the holder shall not beentitled to receive shares in lieu of dividend; (iii) the board may (subject to the requirements of the UncertificatedSecurities Regulations) decline to register a transfer of the shares or any ofthem unless such a transfer is pursuant to an arm's length sale and in any other case mean only the restriction specified in sub-paragraph (i)of this definition; and "statutory notice" means a notice served by the company under the Companies Actsrequiring particulars of interests in shares or of the identity of personsinterested in shares. 54. Omission or Non-Receipt of Notice (A) The accidental omission to give any notice of a meeting orthe accidental omission to send any document relating to any meeting to, or thenon-receipt of any such notice or document by, any person entitled to receivethe notice or document shall not invalidate the proceedings at that meeting. (B) Save as provided by the Companies Acts, the company shall notbe required to send notice of any meeting, or any document relating thereto, toany member otherwise entitled to receive such a notice or document if at leasttwo consecutive notices of meetings (DEL:addressed to the member and sentthrough the post to his registered address :DEL)sent to the member in accordancewith the provisions of these articles have been returned undelivered. Subjectto the provisions of these articles, the company may recommence sending noticesof meetings and documents relating thereto to the relevant member if the member(DEL:requests such recommencement in writing:DEL)communicates with the companyand supplies to the company (or its agent) a new registered address, or a postaladdress within the United Kingdom for the service of notices, or informs thecompany, in such manner as may be specified by the company, of an address forthe service of notices by electronic communications. For these purposes, anotice sent by post shall be treated as returned undelivered if the notice issent back to the company (or its agents), and a notice sent by electroniccommunications shall be treated as returned undelivered if the company (or itsagents) receives notification that the notice was not delivered to the addressto which it was sent. (C) A member present at a meeting in person or by proxy shall bedeemed to have received proper notice of that meeting and, where applicable, ofthe purpose of that meeting. (DEL:84. Age of Directors:DEL) (DEL:No person shall be disqualified from being appointed a director, and nodirector shall be required to vacate that office, by reason only of the factthat he has attained the age of 70 years or any other age. It shall not benecessary by reason of a person's age to give special notice under the CompaniesActs of any resolution in connection with his appointment or election. However,any director who is of the age of 70 or more shall retire in accordance withthese articles. Where the board convenes any general meeting of the company atwhich (to the knowledge of the board) a director will be proposed forappointment or reappointment who at the date for which the meeting is convenedwill have attained the age of 70 years or more, the board shall give notice ofhis age in years in the notice convening the meeting or in any documentaccompanying the notice, but the accidental omission to do so shall notinvalidate any proceedings, or any appointment or reappointment of thatdirector, at that meeting.:DEL) (DEL:89. Retirement on Account of Age:DEL) (DEL:A director who would not otherwise be required to retire under thesearticles shall retire if he is 70 or over at the date of the annual generalmeeting.:DEL) 99. Expenses Each director may be paid his reasonable travelling, hotel and incidentalexpenses of attending and returning from meetings of the board or committees ofthe board or general meetings of the company or any other meeting which as adirector he is entitled to attend and shall be paid all other costs and expensesproperly and reasonably incurred by him in the conduct of the company's businessor in the discharge of his duties as a director. The company may also fund adirector's expenditure in defending any criminal or civil proceedings, indefending himself in an investigation by a regulatory authority or againstaction proposed to be taken by a regulatory authority or in connection with anyapplication under the Companies Acts and may do anything to enable a director toavoid incurring such expenditure, all as permitted by the Companies Acts. 103. Borrowing Powers The board may exercise all the powers of the company to borrow money and tomortgage or charge all or any part of the undertaking, property and assets(present and future) and uncalled capital of the company and to issue debenturesand other securities, whether outright or as collateral security for any debt,liability or obligation of the company or of any third party. (DEL:The board may establish local boards or agencies for managing any of theaffairs of the Company, either in the United Kingdom or elsewhere, and appointany persons to be members of such local boards, or any managers or agents, andmay fix their remuneration. The board may delegate to any local board, manageror agent any of the powers, authorities and discretions vested in or exercisableby the board, with power to sub-delegate, and may authorise the members of anylocal board or any of them to fill any vacancies therein and to actnotwithstanding vacancies. Any such appointment or delegation may be made uponsuch terms and subject to such conditions as the board may think fit and theboard may remove any person appointed as aforesaid, and may annul or vary suchdelegation, but no person dealing in good faith and without notice of any suchannulment or variation shall be affected thereby.:DEL) 104. Agents (A) The board may, by power of attorney or otherwise, appoint anyperson or body of persons whether nominated directly or indirectly by the boardto be the agent of the company upon such terms (including terms as toremuneration) as it may decide and may delegate to any person so appointed anyof its powers, authorities and discretions (with power to sub-delegate). Theboard may remove any person appointed under this article and may revoke or varythe delegation but no person dealing in good faith and without notice of therevocation or variation shall be affected by it. The power to delegatecontained in this article shall be effective in relation to the powers,authorities and discretions of the board generally and shall not be limited bythe fact that in certain articles, but not in others, express reference is madeto particular powers, authorities or discretions being exercised by the board orby a committee authorised by the board. (B) The board may establish local boards or agencies for managingany of the affairs of the company, either in the United Kingdom or elsewhere,and appoint any persons to be members of such local boards, or any managers oragents, and may fix their remuneration. The board may delegate to any localboard, manager or agent any of the powers, authorities and discretions vested inor exercisable by the board, with power to sub-delegate, and may authorise themembers of any local board or any of them to fill any vacancies therein and toact notwithstanding vacancies. Any such appointment or delegation may be madeupon such terms and subject to such conditions as the board may think fit andthe board may remove any person appointed as aforesaid, and may annul or varysuch delegation, but no person dealing in good faith and without notice of anysuch annulment or variation shall be affected thereby. 146. Indemnity of (DEL:Officers:DEL)Directors (DEL:Subject to the provisions of the Companies Acts, the company may indemnifyany director or other officer against any liability and may purchase andmaintain for any director or other officer insurance against any liability.Subject to those provisions, but without prejudice to any indemnity to which theperson concerned may otherwise be entitled, every director or other officer ofthe company shall be indemnified out of the assets of the company against anyliability incurred by him as a director or other officer of the company, indefending any proceedings (whether civil or criminal) in which judgment is givenin his favour or he is acquitted or in connection with any application under theCompanies Acts in which relief is granted to him by the court.:DEL) (DEL:For the purposes of this article no person appointed or employed by thecompany as an auditor is an officer of the company. :DEL)Subject to theprovisions of the Companies Acts, the company may indemnify any director of thecompany or of any associated company against any liability and may purchase andmaintain for any director of the company or of any associated company insuranceagainst any liability. 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