Paul Myners is to publish a second report on institutional investment which will call for a complete overhaul of the proxy voting system.
The report comes in response to last year’s Unilever annual general meeting, where 10 of the firm’s largest shareholders apparently failed to vote.
Shortly after, Myners was appointed by the Institutional Shareholders Committee to head a working party and reform what critics claim is an inefficient and unreliable system.
Under the current system, fund managers give voting instructions which are then passed through a custodian, on to a registrar and then the company.
However, shareholders do not know whether their votes have been cast as the registrar is not obliged to report any problems it encounters.
Myners said: “The ISC has asked me to look at the issue of lost votes, which arises when fund managers or trustees cast their votes but they are lost and not counted.
There are leaks in the system which I’m looking at. The system is too complex and moves to simplify it would be a sensible first step forward.”
Morley Fund Management head of corporate governance Anita Skipper welcomed the impending report and said that reforms to the proxy voting system were long overdue. She said: “I think the fact that Paul Myners, a hard-hitting investment grandee, is heading this suddenly gives it a little more importance.”
And Henderson Global Investors head of corporate governance Rob Lake said: “Paul is right – it is a complete administrative dog’s breakfast. At the moment, the fact that there are so many links in the chain means that firstly, the amount of time in between sending a voting instruction and that being logged is very considerable.
“Secondly, it means that there’s a lot of scope for things to go astray. Whatever happens, the amount of time needs to be drastically reduced and the complexity of the administration needs to be massively streamlined.”
Myners’s first report on investment principles – which was Treasury sponsored – was published in March 2001.
Its recommendations included more training for trustees and elimination of the minimum funding requirement.
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