Correspondence: 20/03/2002 - to John Tiner, FSA 38 Swains
Lane
London
N6 6QR
Mr. John Tiner
Managing Director
Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS
T: 020 7676 1000
F: 020 7676 0030
john.tiner@fsa.gov.uk
20th
March, 2002.
Dear
John,
Improving
the governance of mutuals
I
write as a follow up to the three letters which I sent you dated 17th,
25th and 28th January and to the meeting that Paul Braithwaite
and I had with you on 11th February. Since sending you the letters
I noted on Motley Fool that Ronnie Sloan, actuary and independent board candidate
at Standard Life has for the second year running withdrawn his application in
protest of the proposed voting procedure despite his seemingly suitable qualification.
To paraphrase from his press release the obstacles to his election are that:-
-
it
would be necessary first to vote off one of the existing directors standing
for re-election
-
the
chairman would not agree to abstain from casting all discretionary proxies
in favour of existing directors (thereby thwarting the above), nor from
casting them against Sloan if his resolution ever came to a vote
To
these ends we would like to see ACTION by the FSA to improve the governance
of mutual life offices. We want to see the following provisions set out in legally
enforceable form:-
-
analogous
to the Building Societies Act of 1986 we want a definition of the maximum
number of members required to call an EGM of (say) 0.1%, and to put a motion
to an AGM of 0.05%
-
a
minimum number for proposing people for election to the board. The number
would vary by size of membership, but might be 50 for a Society the size
of Equitable. There are two reasons for this:-
*
to avoid frivolous applications
*
to avoid the incumbent Board splitting "independents'" votes
-
a
ban on voting by resolution, which requires members to vote for and against
each resolution and allows proxy voting. Indeed if a voting paper is signed,
but the votes are left blank, the voter is deemed to give the chairman power
of proxy. The Building Societies Act 1986 allows for both voting by resolution
and postal voting, which the Nationwide adopts. Under postal voting the
yes votes for each candidate are totalled and those with the most votes
are appointed. There is no proxy voting and signed blank forms are void)
-
the
publication on a website of all matters of significant commercial interest
unless those matters are adjudged to be genuinely commercially confidential
in the interests of the members. Where there is a dispute between members
and a board over whether a matter is confidential or not, there should be
a simple means of resolving the dispute on a level playing field which precludes
the board employing a squad of lawyers and barristers to outspend members.
The means might be a reference to the FSA or a county court with provision
for no award of expenses
As
I mentioned to you before, the members of Equitable have seemingly got nothing
from the regulatory authorities so far - time for a change?
I
have written in a similar vein to Howard Davies.
Yours
sincerely
ALEX
HENNEY
c.c.
EMAG Committee and EMAG website.
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