In the December 2007 edition of our e-bulletin we reported that the National Association of Pension Funds (NAPF) had published an updated version of its policy paper entitled "Corporate Governance Policy and Voting Guidelines". NAPF has now updated its policy paper to deal with dispute resolution clauses in articles of association. The updated policy paper states that the introduction or maintenance of provisions in articles of association prescribing arbitration as the sole mode for settlement of disputes between shareholders should be viewed, in the first instance, as a material reduction in shareholder rights. NAPF indicates that investors would therefore normally wish to oppose such provisions unless the board is able to demonstrate clearly that the reduction in shareholder rights is, in the circumstances, outweighed by the benefits of the provision.

For the full text of the NAPF guidelines please click here.