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DNCA Finance

PRI reporting framework 2019

You are in Direct - Listed Equity Active Ownership » (Proxy) voting and shareholder resolutions

(Proxy) voting and shareholder resolutions

LEA 12. Typical approach to (proxy) voting decisions

12.1. Indicate how you typically make your (proxy) voting decisions.

Approach

Based on

12.2. Provide an overview of how you ensure your voting policy is adhered to, giving details of your approach when exceptions to the policy are made.

As an active investor, we attach the utmost importance to using our voting power to ensure that companies are managed in the best interests of our clients. We have formalised a voting policy, which forms the basis of how we exercise our voting rights and which is publicly available on our website: https://www.dnca-investments.com/isr/POLITIQUE.DE.VOTE.2019_EN.pdf

DNCA exercises voting rights attached to securities held in portfolios that DNCA manages directly or by delegation and which it is responsible for exercising, under the following conditions:

- DNCA must vote if the cumulative assets of UCIs managed on the date of the Shareholders' Meeting in the event of physical attendance or on the deadline for sending ballot papers in the event of postal ballots, represents:

  • 1% or more of the equity in the company concerned;
  • Or 0.2% of the total UCI assets managed.

The above criteria are alternatives and not cumulative.

- It aims to vote systematically for all securities held in portfolios by any managed UCI with the SRI label (“SRI UCI”). In principle, DNCA does everything it can to vote at all Shareholders' Meetings related to securities held in portfolios by any SRI UCI, on the understanding that, as an exception, DNCA may not vote at as small a number of Shareholders' Meetings as possible. The proportion of Shareholders' Meetings at which DNCA votes during the year for any SRI UCI is specifically indicated in the “Report on the exercise of voting rights” for the year in question.

- It votes in specific cases not covered by the above rules at the request of the asset management teams.

- DNCA votes at Shareholders' Meetings where the securities concerned have to be blocked during the period between the registration of the securities and the vote. 

The asset management team analyses the resolutions presented and makes its voting decisions in accordance with DNCA’s voting policy. The exercise of voting rights is carried out by the lead fund manager on each company, in collaboration with the RI team. In France, voting instructions are sent by post or by physical attendance at Shareholders' Meetings. For votes abroad, we use Broadridge (ProxyEdge) for online voting. DNCA usually claims the role of vote teller when its holding enables it to.

12.3. Additional information.[Optional]


LEA 13. Percentage of voting recommendations reviewed (Not Applicable)


LEA 14. Securities lending programme

14.1. Indicate if your organisation has a securities lending programme.

14.2. Describe why your organisation does not lend securities.

We do not think lending securities is the best exercise of our fiduciary duty and stewardship responsibilities.

14.4. Additional information.


LEA 15. Informing companies of the rationale of abstaining/voting against management

15.1. Indicate the proportion of votes where you or the service providers acting on your behalf have raised concerns with companies ahead of voting.

15.2. Indicate the reasons for raising your concerns with these companies ahead of voting.

15.3. Additional information. [Optional]

We tend to meet prior to the AGM with most of the companies in which we hold over 1% of the capital. It is especially the case for French companies, in which we are generally a long-term shareholder known to be very committed to good governance principles. We usually claim the role of vote teller/scrutineer when our holding in the company enables us to.


LEA 16. Informing companies of the rationale of abstaining/voting against management

16.1. Indicate the proportion of votes participated in within the reporting year in which, you and/or the service provider(s) acting on your behalf, have communicated to companies the rationale for abstaining or voting against management recommendations.

16.2. Indicate the reasons your organisation would communicate to companies, the rationale for abstaining or voting against management recommendations.

16.3. In cases where your organisation does communicate the rationale for the abstention or the vote against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

As part of our meetings with companies prior to the AGM, in case we plan to oppose certain resolutions, we usually discuss with the company our rationale. 


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities where you and/or your service provider have the mandate to issue (proxy) voting instructions, indicate the percentage of votes cast during the reporting year.

Votes cast (to the nearest 1%)

72 %

Specify the basis on which this percentage is calculated

17.2. Explain your reason(s) for not voting on certain holdings

17.3. Additional information. [Optional]


LEA 18. Proportion of ballot items that were for/against/abstentions

18.1. Indicate if you track the voting instructions that you and/or your service provider on your behalf have issued.

18.2. Of the voting instructions that you and/or third parties on your behalf issued, indicate the proportion of ballot items that were:

Voting instructions
Breakdown as percentage of votes cast
For (supporting) management recommendations
97 %
Against (opposing) management recommendations
2 %
Abstentions
1 %
100%

18.3. In cases where your organisation voted against management recommendations, indicate the percentage of companies you have engaged.

90

18.4. Additional information. [Optional]

We tend to engage prior the AGM with all the companies in which we intend to vote against some resolutions.


LEA 19. Proportion of ballot items that were for/against/abstentions

19.1. Indicate whether your organisation has a formal escalation strategy following unsuccessful voting.

19.3. Additional information. [Optional]

We do not have a formal escalation procedure in case of unsuccessful voting, as it is a matter that is treated on a case-by-case basis.

As we mentioned, we tend to meet with all the companies for which we intend to oppose some resolutions, and we therefore discuss our rationale with the company's Board Secretary or IR prior to the AGM. In case our vote is unsuccessful, we generally raise again our concern with the top management in the next meetings we have with the company. In any case, the reasons for opposing the resolution are included in the investment case, which can sometimes lead us to reduce our exposure to the company.


LEA 20. Shareholder resolutions

20.1. Indicate if your organisation directly or through a service provider filed or co-filed any ESG shareholder resolutions during the reporting year.

20.6. Describe whether your organisation reviews ESG shareholder resolutions filed by other investors.

We systematically review ESG resolutions for all the companies where we exercise our vote (i.e. all the company in which we hold > 1%, or that constitute >0.2% of the total UCI assets managed, or that are in our SRI funds).

As an extension of its responsible investment policy, DNCA is favourable to the filling of ESG resolutions, when it raises relevant issues. These resolutions are analysed on a case-by-case basis, based on the ESG issues and risks the company has to deal with, and with a constant concern to preserve sustainable growth and value creation. Finally, in the event of serious failures or violations of the corporate responsibility principles, DNCA reserves the right, in addition to its regular engagement with the companies it invests in, to oppose certain resolutions (discharge, election of directors, compensation policy).

20.7. Additional information. [Optional]


LEA 21. Examples of (proxy) voting activities

21.1. Provide examples of the (proxy) voting activities that your organisation and/or service provider carried out during the reporting year.

ESG Topic
Other governance
Conducted by
Objectives

We voted against the renewal of a Board director at a French capital goods company. The lack of independence of the Board is a clear red flag on the Board's ability to supervise and challenge the top management. In a context when the company's strategic direction and delivering are being questioned, we believe the independence of the Board needs to be enhanced.

Scope and Process

We voted against the renewal of a Board director at a French capital goods company.

Outcomes
ESG Topic
Other governance
Conducted by
Objectives

We voted against the resolution to authorise political donations and political expenditures at a UK business services company. As explained in our voting policy, we are not in favour of political donations by corporates.

Scope and Process

We voted against the resolution to authorise political donations and political expenditures at a UK business services company.

Outcomes
ESG Topic
Executive Remuneration
Conducted by
Objectives

We voted against a resolution allowing for a Related-Party Transaction between the company and its Lead Non-independent Director at the AGM of a French construction company. These consultancy fees were in our view not justified. After a recounting of the votes, this resolution was in the end rejected by the AGM.

Scope and Process

We voted against a resolution allowing for a Related-Party Transaction between the company and its non-independent and former exec Lead Director at the AGM of a French construction company. We had engaged prior to the AGM with the company to voice our concern regarding this resolution.

Outcomes

21.2. Additional information. [Optional]


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