A consultative document from the Department of Trade and Industry also outlined proposals to make it easier for pension funds to appoint representatives to speak at annual meetings. In the present state of the law there are a series of technical difficulties, which were pointed out to the DTI by the National Association of Pension Funds, which asked for an amendment of section 375 of the Companies Act.
The DTI said that one effect of changing the act in the way suggested by the NAPF would be to benefit the increasing numbers of individual shareholders who use the services of nominee companies, a result of the spread of electronic settlement. These shareholders would also find it easier to appoint representatives to speak at annual meetings.
The DTI consultative document said one drawback was that a change in the law would allow corporate shareholders of all kinds to appoint multiple representatives at meetings in order to carry votes on a show of hands. But the document suggested that this would be outweighed by the advantages.
The DTI was responding to a recommendation by the Commons Select Committee on Employment, which said: "We recommend that the Companies Act is amended to require shareholders' resolutions, where they are supported by a sufficient number of shareholders and are limited in length, to be circulated by the company to all shareholders without cost." But the DTI made clear that the full implementation of this proposal would be expensive and difficult to carry out in practice.
Questions it asked were: How could the timetable for circulating papers for agms be made known to shareholders, how could the costs of circulating resolutions be kept to a minimum, and what safeguards should there be against the disruption of business at agms?
One of the principal concerns was to avoid forcing companies to spend up to pounds 100,000 printing and posting shareholders' resolutions ahead of the agm.