08 Shareholder relations

The board should foster constructive relationships with shareholders that encourage them to engage with the entity.

FMA Guidelines

We encourage widely-held entities to:

Have clear published policies for shareholder relations and regularly review practices, aiming to clearly communicate the goals, strategies and performance of the entity.
Maintain an up-to-date website, providing:
- a comprehensive description of its business and structure
- a commentary on goals, strategies and performance
- key corporate governance documents and, if not included in its annual report, a separate section which reports against the entity’s adherence to these principles
- all information released to the stock exchange (for listed entities), including reports to shareholders.

Encourage shareholders to take part in annual and special meetings by holding these in locations, and at times, that are convenient to shareholders and by providing clear and meaningful information about the business to be conducted at these meetings.
The board should facilitate questioning of external auditors by shareholders during the annual meeting.

Additional Forum Guidelines for NZ listed companies

Constructive shareholder relations depends on respect for shareholder rights.

Dilution

Listed companies should not be able to materially dilute shareholders without their approval. As such shareholder approval should be sought for share issuance above 5% of total shares on issue and the board should provide a full explanation of share issuance regardless of the level.

Capital allocation

Boards should provide a clear explanation to shareholders of major capital allocation decisions, the scope of any related independent report and the selection of the advisor.

Shareholder meetings

Shareholders should not have to meet unduly difficult thresholds to call general meetings, propose resolutions or otherwise exercise shareholder rights
Mechanisms should be in place to encourage participation, particularly through electronic communications and voting processes including postal voting and the company should ensure votes are properly counted and recorded.
The board should ensure that shareholders have the right to place items on the agenda of general meetings, and to propose resolutions subject to reasonable limitations.
Shareholders should have the right to vote on corporate governance decisions such as director election/re-election, executive and director remuneration policy, appointment of external auditor and all constitutional changes.
Shareholder approval should be required for granting securities to a director, unless it is under a bona fide salary sacrifice arrangement from a director’s fixed remuneration.
Boards should support the principle of one share/one vote in the voting process and as such count votes according to poll rather than a show of hands, should not bundle resolutions and only allow voting on resolutions that have been included in the Notice of Meetings.
The board should ensure that the annual shareholders notice of meeting is posted on the company’s website as soon as possible and preferably at least 28 days prior to the meeting taking place.
The Board should publish the voting results for each resolution at a meeting on its website in particular results by poll.
When, in the opinion of the board, a significant proportion of votes have been cast against a resolution at any general meeting, the company should explain when announcing the results of voting what actions it intends to take to understand the reasons behind the vote result.
Where possible, all directors on the board, senior executives and the external auditor should attend annual shareholders’ meetings and be available, when requested by the chairperson, to answer shareholder questions.

Other Communications

The chair and board should discuss governance and strategy with shareholders. Non-executive directors should be offered the opportunity to attend scheduled meetings with shareholders and should expect to attend meetings if requested by shareholders, where appropriate. Boards should clearly explain meeting procedures including guidance relating to compliance with disclosure and other relevant market rules.
The independent chair should attend sufficient meetings with a range of shareholders to listen to their views in order to help develop a balanced understanding of the issues and their concerns.
The board should state in the annual report the steps they have taken to ensure that the members of the board, and in particular the non-executive directors, develop an understanding of the views of shareholders about the company, for example through direct face-to-face contact, analysts’ or brokers’ briefings and surveys of shareholder opinion.