Stand up and be counted – voting by a show of hands or on a poll?

Do shareholders vote at your Annual General Meeting by a poll or by a show of hands? Whichever method you choose, there are a number of practical steps you must consider. The first port of call is your company’s articles of association, as these will state how voting is to be decided at a general meeting.

There is a growing trend for listed companies to arrange for the business at their AGMs to be voted on by a poll. It can be said that the full power of the shareholders can only be felt when a poll is called and some listed companies have changed their articles and abolished voting by a show of hands completely. The final result of a poll vote is considered to be more democratic as it reflects the voting preferences of all shareholders who have lodged a proxy vote and not just those who attend the AGM. However, this can mean a more lengthy and involved process at the AGM.

Whilst PIRC and other proxy voting agencies consider poll voting to be the most appropriate way for listed companies to undertake business at general meetings, the UK Shareholders Association has found otherwise. It seems that private shareholders wish to retain voting by a show of hands as it is one of the few ways that private shareholders attending the AGM can have an impact on the board. Voting by a show of hands is easier and more straightforward on a practical level at the AGM, especially if there is a consensus. Each shareholder present in person or by proxy has one vote, irrespective of how many shares they hold. The result of the AGM can be announced straight after AGM. However, if there is opposition to a proposal or a shareholder demands a poll, the Chairman must be prepared to call a poll and the Company Secretary should include this procedure within the Chairman’s script.

It is for each individual company to determine the method to be used, based on the company’s circumstances and its shareholder base.

If companies move to voting on a poll, the Notice of AGM should set out that voting will be held by poll and explain the reasons for doing so. This will also need to be reflected in the Chairman’s script. Liaison with your company’s registrars will also be key as they will be responsible for issuing poll cards, counting them and checking them against proxy forms lodged and against the register of members and preparing a report and final certificate of the result of the pol. So it is important that you highlight this in advance with them so that they can ensure the appropriate equipment is brought to the AGM to conduct the poll.

Whichever method is used, the results of the AGM must be announced via an RNS announcement as soon as possible following the conclusion of the AGM, uploaded to the National Storage Mechanism and must be displayed on the company’s website.

Also remember that if there is a significant proportion of votes cast against a resolution (considered to be around 20% or more), the company should explain when announcing the results of voting what actions it intends to take to understand the reasons behind the result.

If you would like further information or detailed assistance in preparing for your Annual General Meeting, please get in touch.

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Author: Vistra Corporate Law