In January 2010, the National Association of Pension Funds (NAPF) published the 2009/10 updates to its Corporate Governance Policy. The relevant guidelines are designed to assist shareholders and others in interpreting provisions of the Combined Code when considering how to vote at company meetings.
One of the key areas covered this year relates to general meetings convened by listed companies on short notice. The NAPF policy update in this area follows the recent statements of US corporate governance adviser, RiskMetrics Group (see our December 2009 E-Bulletin article: RiskMetrics Group – Draft policy on notice periods for general meetings of listed companies).
NAPF states that, while it considers that the ability to hold meetings at short notice is important and commercially desirable in certain circumstances, it expects that companies will give as much notice as practicable when calling a general meeting. Therefore, the additional flexibility to call meetings at 14 (rather than 21) days' notice should only be used in limited circumstances where it would clearly be to the advantage of shareholders as a whole.
Accordingly, NAPF states that, when tabling an enabling resolution to convene general meetings on 14 days' notice, it encourages listed companies to outline the circumstances in which a "short notice" general meeting may be called. If the proposal at a general meeting is not time-sensitive, a company should not normally use the shorter notice period.
Other areas included in the 2009/10 Policy Updates include commentary on the independence of a director who has been nominated by a dissenting significant shareholder (but who is not associated with that shareholder) and considerations to be taken into account in considering directors' suitability for re-election.