FTSE Russell conducts a Minimum Voting Rights Test - is that impacted?

September 17, 2024 03:42 AM AEST | By Team Kalkine Media

Google News:

FTSE Russell conducts a Minimum Voting Rights Test - is that impacted? — Image source: shutterstock

Recent News

What are next big copper projects? UBS tells when equipment makers cou...

EUR/USD poised to rack up more gains as ECB and Fed rate paths set to...

Carney launches ‘One Canadian Economy’ Act to unify trade, approvals

Trump signs orders to enhance drone defenses, support supersonic trave...

The recent changes to the UK listing regime, effective from July 29, 2024, have introduced significant amendments to the regulatory framework governing weighted voting rights. Despite these updates, certain requirements for inclusion in FTSE Russell indices, particularly concerning public voting rights, remain unchanged.

Requirement for Public Voting Rights

A key regulation applied across all FTSE Russell indices is the requirement that more than 5% of voting rights must be held in public hands. This stipulation applies to companies classified with a developed market nationality, ensuring that there is a sufficient level of public participation in corporate governance.

For instance, companies such as HSBC Holdings plc (HSBA) and AstraZeneca plc (AZN), which are prominent in the FTSE UK Index Series, must adhere to this requirement. This rule ensures that a minimum proportion of voting rights is accessible to public investors, maintaining a level of market liquidity and governance transparency.

Impact of Specified Weighted Voting Rights Shares

With the introduction of the new listing regime, companies can now issue specified weighted voting rights shares with enhanced voting power. This change allows for greater flexibility in structuring voting rights, including potentially more significant influence for certain shareholders.

Despite this flexibility, the requirement for public voting rights remains stringent. When a UK company has specified weighted voting rights shares, the enhanced voting ratio will be used in the calculation of minimum voting rights to determine compliance with the public voting rights requirement. This means that the enhanced voting power must be factored into the calculation to ensure that the total voting rights held by the public still exceed the 5% threshold.

For example, if Diageo plc (DGE) or GlaxoSmithKline plc (GSK) issues weighted voting rights shares under the new rules, the enhanced voting ratio associated with these shares will be considered when assessing whether the company meets the public voting rights requirement for FTSE Russell indices.

Reference to FTSE UK Index Series Ground Rules

To understand the specific details of how enhanced voting rights are integrated into the minimum voting rights calculation, companies and stakeholders should refer to Rule 6.3 of the FTSE UK Index Series Ground Rules. This rule provides comprehensive guidelines on how public voting rights are to be calculated, including the impact of any enhanced voting rights arrangements.

In summary, while the new listing regime has introduced significant changes to the management of weighted voting rights, the requirement that more than 5% of voting rights must be held in public hands remains in place. The enhanced voting ratio for specified weighted voting rights shares will be used in the calculation to ensure compliance with this requirement, maintaining transparency and public participation in corporate governance. For further details on this regulation, Rule 6.3 of the FTSE UK Index Series Ground Rules should be consulted.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.