Dear Constituent,

Thank you for contacting me about shareholder rights and the Shareholder Rights Directive.

Good corporate governance is vital to creating the right environment for long-term, sustainable growth. Shareholders are at the heart of the UK corporate governance framework and it is right to put more information and power in their hands.

Many individual investors now hold their shares in nominee accounts managed by stockbrokers. As I understand it, this is an efficient and popular means of holding shares, which reduces costs for the underlying investor, but it means that the broker is the shareholder and automatically holds the information and voting rights for the shares.

Under the Companies Act 2006, arrangements can be made to establish proxy voting by the investor, and to ‘pass back’ the information rights to the investor. In practice, though, many brokers do not pro-actively offer individual investors this option, because of a perceived lack of interest by investors in being active shareholders.

While I appreciate your frustration that the Government may not be taking forward new measures ahead of the new Shareholder Rights Directive, I understand that this is an issue being kept under review, alongside corporate governance reforms more broadly.

Thank you again for taking the time to contact me.

EDWARD LEIGH MP