Filing a shareholder proposal in the UK

• Companies Act 2006 (‘CA2006’) 
• The Companies (Model Articles) 2008 

UK shareholders have a clear right to put a resolution proposing to direct the board on how they should act on a matter.  

There are two legal mechanisms for filing a shareholder proposal, meaning shareholders may have the freedom to file both non-binding and binding resolutions.^[1] However, typically resolutions are presented as special resolutions.^[2]

Under the model articles 4(1), shareholders have a reserve power to direct the directors to take, or refrain from taking, a certain action by special resolution. Important: do check the company’s articles of association for any unique restrictions or alterations to shareholders’ reserve power. 

Under section 338 of the Companies Act, shareholders of a public company have the power to require a company to circulate a resolution to be voted upon.  

The mechanism under Model Articles 4(1) – the reserve power to direct the directors to take, or refrain from taking, a certain action – provides shareholders with relative freedom to ask a board to take an action. 

However, it is advisable that the resolution focuses on one issue and directs the company to do something that is achievable within a reasonable timeframe and not be overly burdensome or costly. 

At least 5% of the total voting rights of eligible members, or at least 100 members representing an average of at least GBP£100 each (GBP£10,000 collectively).

There are no ownership period or share-blocking restrictions. Shareholders must hold the requisite number of shares at the time that they file the resolution. 

A requisition form with certain details and evidence of the relevant shareholding must be provided. 

• If shares are held directly in certificated form, this form is simple to complete.  
• If shares are held indirectly through an intermediary, a custodian statement confirming the shares held is required.
    

There is no set format for the requisition form, but it must evidence certain information, including the full name and address of the shareholder, the number of shares held and that the shares hold voting rights.  

The full list of required information is found at Section 153(2) of the Companies Act 2006. 

The documents should be presented to the company at the registered address in written form (English language). 

Can be in hard copy or electronic form – registered post is recommended for proof of receipt. 

Your submission must include the draft resolution, a supporting statement and proof of ownership. 

A requisition form with evidence of the shareholding(s) is also required.

Where applicable, a custodian statement to evidence indirect holdings.  

The resolution proposal must be received by the company no later than six weeks before the AGM to which the requests relate, or, if later, the time at which notice is given of that meeting. 

However, the Companies Act 2006 sets a deadline date of 31 December in the year preceding the AGM for shareholder proposals to be filed for companies to bear the cost of circulating the resolution to shareholders. Some companies may extend this date via their articles of association (to align with their year-end). This is very important – these costs are approximated to run between GBP£100,000-£200,000 and funds must be deposited with the company before a proposal can be actioned.^[3]

A company must table a resolution if filed in accordance with the legal and procedural requirements and only has legal right to reject a proposal if:  

1. it would, if passed, be ineffective;  
2. it is defamatory of any person; or 
3. it is frivolous or vexatious.
   
   

There is no system of appeal in the UK.^[4]

Special resolutions require at least 75% of the total voting rights of eligible members.  

 
Under the UK’s Corporate Governance Code, if a resolution receives more than 20% shareholder support the board is recommended to take certain actions. 

There are no restrictions on resubmitting a resolution at a future AGM. 

Under Provision 6 of the Corporate Governance Code, when more that 20% of votes have been cast against a resolution, a company should explain what actions it intends to take to consult shareholders to understand the reasons behind the result. 

The Companies Act 2006 sets a deadline date of 31 December in the year preceding the AGM for shareholder proposals to be filed if companies are to bear the cost of circulating the resolution to shareholders.  

ClientEarth (2021), Know your rights

Thomas Reuters Practical Law, Shareholders’ Rights in Private and Public Companies in the UK

ShareAction (2019), UK Guide to Shareholder Resolutions