August 18, 2011
FairPensions Publishes Guide to Shareowner Resolutions
by Robert Kropp
Building on the success of shareowner action over oil sands development, FairPensions guides NGOs
and institutional investors through the process of filing resolutions in the UK.
The practice of submitting of shareowner resolutions is still rare in the UK, especially compared
to the US, yet it has met with success in recent years. In 2010, for example, an international
coalition of investors which included the UK-based Fair Pensions targeted the controversial practice of oil
sands development at a number of companies, including BP and Shell.
resolution at Shell received more than 10% of shareowners' votes, Duncan Exley, Director of
Campaigns at FairPensions, stated, "Today sent a clear signal that shareholders are concerned about
the risks associated with tar sands, and need to see greater transparency from Shell."
However, despite isolated successes, "It is likely that many NGOs (nongovernmental
organizations) and socially responsible shareholders will continue to be deterred from utilizing
this important shareholder right," FairPensions stated in its recently published Guide to Shareholder Resolutions in the UK, in large part due to "the
onerous, complex and ambiguous provisions of the Companies Act 2006."
pointed out, the filing of shareowner resolutions provides NGOs and institutional investors with
opportunities to influence corporate behaviors, especially when it can be demonstrated to investors
"that the company has made or is about to make a poor decision, one which could have financial
consequences either now or in the future."
FairPensions also observed that the relative
scarcity of shareowner resolutions in the UK could lead to greater media coverage when one is
The easiest path to complying with the Companies Act 2006, the Guide states, is
to form a coalition of 100 investors, the average holdings of each having a value of at least
10,000 pounds ($16,500). Once the coalition is formed, a resolution directing the company's board
of directors to take a specific action may be filed. FairPensions recommended that the resolution
focus on a single issue, direct the company to act within a reasonable timeframe, and protect
The Guide then proceeds to advise activists on mobilizing support
through such means as investor briefings, media engagement, and cooperation with investors located
in other countries. The oil sands campaign was noteworthy for its cooperation between investor
groups in the UK and the US.
In the UK, FairPensions noted, a shareowner resolution is
referred to as a special resolution, and requires the support of 75% of voted cast in order to be
passed. Unlike shareowner resolutions in the US, the resolution is binding upon the company when
that threshold is reached.