voting against board resolution

[Jiya024]

Dear Professor,

I don’t quite get the below line:

“When 20% or more of votes have been cast against the board recommendation for a resolution, the company should explain what actions it intends to take to understand the reasons behind the result.”

who is ” the company” ? shareholders or management or board?

and also how is the company explaining party and understanding party at the same time?

I mean who needs to explain, and who needs to understand?

[Kim Smith]

This isn’t a quote from our notes – so please remember to state what you are quoting from.

I found this:
“When 20 per cent or more of votes have been cast against the board recommendation for a resolution, the company should explain, when announcing voting results, what actions it intends to take to consult shareholders in order to understand the reasons behind the result.”

It is clear from this that “the company” cannot be the members (shareholders) – it must be the board of directors (or other management body) who manage the company in the interests of the shareholders. “The company” is a “thing” it cannot do anything – anything a company “does” has to be through real people.

[Author]

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