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Somerset Capital Management LLP

PRI reporting framework 2020

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

          In the absence of specific voting guidelines mandated by particular clients, the Firm will endeavour to vote proxies in the best interests of each client
        

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

We take into account information from various sources including our own meetings with companies, our previous voting decisions and engagement, and information provided by external parties (including our proxy advisor ISS but will generally apply the following guidelines in voting proxies:

  1. For routine housekeeping proposals such as the reappointment of auditors and the approval of accounts, we will generally vote in favour.
  2. For proposals which limit shareholders’ ability to replace management or directors of an issuer, or cause management to be overrepresented on the board, introduces cumulative voting, unequal voting rights and creates supermajority voting, we will generally vote against.

For other proposals, we determine whether a proposal is in the best interest of its clients and may take into account the following factors, among others:

  • whether the proposal was recommended by management and our opinion of management;
  • whether the proposal acts to entrench existing management;
  • whether the proposal fairly compensates management for past and future performance; and
  • whether the proposal is likely to strengthen the issuer’s business franchise and therefore benefit its shareholders over a time frame that is relevant for our clients’ portfolio

Process
All proxies notified to us by our clients’ custodians will be referred to the fund managers who are the only ones authorised to vote proxies, where applicable, on behalf of clients.

The fund managers will be provided with the following information:

  • The accounts containing the security to which the proxy relates; and
  • The number of votes each client portfolio controls (reconciling any duplications) and the date by which the proxy must be voted in order to allow enough time for the completed proxy to be returned to the issuer prior to the voting taking place.

The Compliance Officer will also be informed of the proxy vote notification. Absent material conflicts of interest notified by the fund manager voting the proxy, the decision on how to vote the proxy will be communicated by the fund manager to the Operations team who will in turn communicate this to the client custodian to enable them to process the vote. The Compliance Officer will review proxies voted no less than annually to ensure that they were voted in accordance with these guidelines.

12.3. Additional information.[Optional]

The covering analyst and relevant fund manager receive ISS research prior to any vote, and meet to discuss relevant actions. We often vote against ISS and/or the management and this decision is taken after the fund manager and analyst have discussed the topic. Any large contentious issues are discussed by the wider team at the weekly investment meeting. 


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


LEA 14. Securities lending programme (Private)


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

15.1. Indicate the proportion of votes participated in within the reporting year in which where you or the service providers acting on your behalf raised concerns with companies ahead of voting.

15.3. Additional information. [Optional]


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

16.1. Indicate the proportion of votes where you, and/or the service provider(s) acting on your behalf, communicated the rationale to companies for abstaining or voting against management recommendations. Indicate this as a percentage out of all eligible votes.

16.2. Indicate the reasons why 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 abstaining or voting against management recommendations, indicate whether this rationale is made public.

16.4. Additional information. [Optional]

We currently engage with portfolio companies ahead of voting at annual general meeting on an adhoc basis. Engagements prior to AGM's tend to pertain governance issues. For example, we recently discussed proposed changes to Executive Directors’ remuneration with the Chair of a portfolio company's Remuneration Committee in advance of their AGM. 


LEA 17. Percentage of (proxy) votes cast

17.1. For listed equities in which you 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%)

95 %

Specify the basis on which this percentage is calculated

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

With the exception of some Frontier markets where our custodians do not offer proxy voting services, we vote on all occasions.

17.3. Additional information. [Optional]


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


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]


LEA 20. Shareholder resolutions (Private)


LEA 21. Examples of (proxy) voting activities (Private)


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