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Company Law Reform Bill [HL]

This amendment seeks to increase one of the thresholds required for members to propose a resolution for an AGM from 100 members holding on average £100 each of paid-up capital to 100 members holding on average £1,000 each of shares at market value. We believe that the right for shareholders to propose a resolution for the AGM is important to preserve as part of the Government’s agenda for enhancing shareholder engagement. However, in many cases this amendment could make it significantly more difficult for small shareholders to club together to propose a resolution for an AGM. While the other threshold for proposing a resolution of members holding 5 per cent of voting rights would remain, in large companies this would usually be too high a threshold for small shareholders to reach. In effect, this amendment could diminish and take away an existing right of the smaller shareholder. We understand that using the measure of ““paid-up capital”” may seem somewhat anachronistic. However, this term applies across the Bill to all companies, private and public, in situations where members may propose resolutions or make other requests. Changing the measure of the members’ threshold to an amount related to the ““market value”” of the shares they hold would be difficult to operate for certain types of companies—private or unlisted public companies, for example, that do not necessarily have an agreed or public market value. In addition, shareholders’ rights would fluctuate with the value of their shares. A right that I might have had one day as a member of a group of shareholders, I could lose the next day because my shares have diminished in value. It is when share prices are falling that it is sometimes most important for shareholders to be able to hold directors to account. I understand what is behind the noble Lord’s amendment, but I hope that he will agree not to press it.