Shareholder groups accuse RBS of blocking democracy

A resolution from 168 shareholders on the matter and coordinated by ShareSoc and the UK Shareholders Association was thrown out by the bank this week.

The still 73 per cent state-owned lender said that: “Having taken legal advice, the RBS Board has taken the decision not to take forward a proposed AGM Resolution submitted by ShareSoc and UK Shareholders’ Association that called for the creation of a narrower ‘Shareholder Committee’.”

However, ShareSoc has now responded by claiming that RBS’s stance denies shareholders their right to a vote on a plan directors might not like on a flimsy technicality.

“ShareSoc will not permit this unreasonable obstruction of shareholder democracy to stand,” the organisation said.

“It is a basic principle of company law that shareholders can requisition resolutions which must be put to a vote of shareholders. If the directors do not like a requisition, then they can advise shareholders to vote against it. But they should not be using tenuous technical excuses to avoid putting it to shareholders.”

ShareSoc is consulting lawyers about the proposal, which it believes has wider ramifications than RBS. The corporate governance regime is under renewed scrutiny in the UK.

The Government published a Green Paper on the subject in November, when Prime Minister Theresa May said actions by some firms she did not name had damaged public confidence in big business.

ShareSoc chairman Mark Northway, said: “It is disappointing that, instead of leading from the front on corporate governance, RBS have instead chosen to try to thwart this initiative. This behaviour by the directors of a company that is majority owned by the UK Government underlines the broad reticence of UK boards to address the breakdown of the agency model and the rights of shareholders.”

RBS has not responded the shareholder group’s statements by responding to the initial proposals, RBS Chairman, Howard Davies, said: “Acknowledging past mistakes and recognising the part that RBS must play in reform, we continue to develop our culture and priorities. Having looked closely at how we can improve and build upon existing arrangements at board level, we believe that RBS would benefit from strengthening the voice of our employees, customers and wider stakeholders.

“Stakeholder representation is hugely important to us; we want to be trusted, respected and valued by all of our stakeholders. We thank ShareSoc and UKSA for their input. We will continue to engage with all relevant bodies and are committed to embracing and supporting the Government’s call for reform, which we believe will enhance engagement across UK industry as a whole.”