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Company Law Reform Bill [HL]

Clause 866 confers a power on the Secretary of State and the Treasury to make regulations requiring certain categories of institutional investors to provide information about the exercise or non-exercise of their voting rights. Greater transparency of voting can be expected to improve the confidence of savers in the stewardship exercised on their behalf by institutional investors. It also increases the accountability of institutional investors for their voting decisions and reduces the likelihood of their voting contrary to the interests of their members or clients where a potential conflict of interest arises. This in turn should enhance the quality of corporate governance, adding to the efficiency of institutional investment, all of which is positive for savers. In bringing forward this proposal we have been encouraged by the growing trend, domestically and internationally, to require disclosure of voting and for such disclosure to be given voluntarily. Against this background, the Government are keen to see better progress. Ideally, the very existence of the power will encourage institutional investors not currently disclosing this kind of information to respond and adopt best practice. However, if the pace is slow, it is right to consider the use of this power to bring the average up to the level of the best performers. So we are quite clear about our objective. We would prefer this to happen voluntarily but, if it does not, we will need the power to speed up the process. I acknowledge the noble Lord’s questions about how we will do this in the most effective way. I also acknowledge the concerns underlying the noble Lord’s amendments. I can reassure him that before a statutory disclosure regime was introduced there would be full consultation and a cost/benefit analysis to ensure that any final regime was proportionate and properly targeted. Any final decision would, of course, also be subject to this House’s agreement through the affirmative resolution procedure. On that basis, we believe that the clause should stand part of the Bill. Clause 866 agreed to. Clause 867 [Disclosure of information under the Enterprise Act 2002]: