For the European Confederation of Directors’ Associations (ecoDa), the review of the Principles is not only timely because of the Shareholders’ Rights Directive, but it responds also to a broader demand from the corporate world to apply similar transparency and independence rules to all actors in the governance of listed companies. Proxy advisors play an increasing and critical role in Corporate Governance.
In its response, ecoDa recommends that proxy advisors give a clear view of their product portfolio and provide greater transparency on their business model. Statutory auditors have been through the same journey and inspiration can be taken from the new requirements imposed by the Audit Reform. Statutory auditors have indeed restrictions in terms of non-audit services that they can provide to the same company to preserve their independence. According to ecoDa, the policy guidelines for non-audit services might be an interesting reference for proxy advisers to develop their own guidelines. The fact that shareholder voting research & analysis providers have taken the initiative of this public consultation shows that they are open for dialogue and for any improvement suggestion. They acknowledge that their increasing role in general meetings goes hand in hand with greater accountability.
The ‘Best Practice Principles for Shareholder Voting Research and Analysis’ (“the Principles”) were introduced in 2014. They were developed by the industry to provide a voluntary performance and reporting framework, to promote a greater understanding of its role, and to promote the integrity and efficiency of processes and controls related to the provision of these services and management of any conflicts of interest. The purpose of the current review, as set out in the terms of reference, is to consider whether the Principles and supporting arrangements need to be revised in light of the experience of implementing them, as well as market and regulatory developments since the Principles were introduced. >>> https://bppgrp.info/2017-consultation/