CU backs down over voting on annual report

Commercial Union performed an embarrassing volte-face yesterday, caving in to pressure from Pirc, the corporate governance consultancy, to reinstate a vote on its annual report and accounts.

The insurance group had dropped the vote from the agenda of its annual meeting which is due to be held in London on 15 April.

In a letter to Pirc, CU's chairman, Nicholas Baring, promised to reintroduce the traditional vote at next year's annual meeting and said he would stand up at this year's meeting to put that intention on public record. He stopped short of cancelling this year's meeting to change the agenda this time.

Anne Simpson, at Pirc, welcomed the decision: "Voting is a good thing and should be accepted as such. We would like to see votes on more issues, not less. Mr Baring was very sorry and humble and we move on to the next issue."

Although it is not a requirement of the Companies Act that there should be a vote on the annual report and accounts, few companies prevent their shareholders from casting their vote on one of the few general resolutions faced by a board of directors. GEC and Royal Bank of Scotland are among those companies that merely "lay the report before the shareholders" as required by the Act.

A year ago, Pirc had a similar run-in with British Aerospace, which tried to remove the vote as a way of countering the high levels of protest it often faces at its annual meetings. Pirc succeeded in having that vote reinstated after a longer fight.

There was confusion as to why CU had chosen to drop the vote. Originally the move was attributed to the fact that many shareholders would receive only a summary report and would be unable to vote on the full version. Yesterday Mr Baring blamed a legal drafting oversight. Commercial Union and British Aerospace share the same firm of solicitors, Linklaters.