The Company no longer has an authorised share capital having adopted new articles of association on April 28, 2010. On December 31, 2010, there were 1,871,779,201 ordinary shares of 20p each, 23,379,971,475 C Shares of 0.1p each and one Special Share of £1 in issue. The ordinary shares are listed on the London Stock Exchange.
At the AGM on May 6, 2011 the directors will recommend an issue of 96 C Shares with a total nominal value of 9.6 pence for each ordinary share. Together with the interim issue on January 4, 2011 of 64 C Shares for each ordinary share with a total nominal value of 6.4 pence, this is the equivalent of a total annual payment to ordinary shareholders of 16 pence for each ordinary share.
The Company attaches importance to the effectiveness of its communications with shareholders. It publishes an Annual report which is available on the Group’s website. There are also separate reports covering the environment and community relations. The Company maintains a regular dialogue with institutional shareholders and the financial community. This includes presentations of the preliminary and interim results, regular meetings with major shareholders, participation in stockbrokers’ seminars and site visits.
Each year the Company holds an investors’ seminar in order to improve the financial community’s understanding of the Group and to introduce investors to a broader range of management. All shareholders can gain access to these and other presentations, as well as to the Annual report and other information about the Group, on the Group’s website at www.rolls-royce.com.
Holders of ordinary shares may attend the Company’s AGM at which the Company highlights key business developments during the year and at which shareholders have an opportunity to ask questions. The chairmen of the audit, nominations, remuneration, ethics and risk committees are available to answer any questions from shareholders on the work of their committees.
The Company confirms that it sends the AGM notice and relevant documentation to all shareholders at least 20 working days before the date of the AGM. For those shareholders who have elected to receive communications electronically, notice is given by email of the availability of documents on the Group’s website. Responsibility for maintaining regular communications with shareholders rests with the executive management team led by the Chief Executive. However, the Board is informed on a regular basis of key shareholder issues, including share price performance, the composition of the shareholder register and market expectations. Independent research is commissioned annually into institutional shareholder perceptions of the Group. The Chairman, the Senior Independent Director and the non-executive directors make themselves available to meet with shareholders as required.
The rights and obligations attaching to the different classes of shares are set out in the Company’s Articles of Association.
Holders of ordinary shares are entitled to receive the Company’s Annual report. They are also entitled to attend and speak at general meetings of the Company, to appoint one or more proxies or, if they are corporations, corporate representatives, and to exercise voting rights. They have the right to ask questions at the AGM relating to the business of the meeting and for these to be answered, unless such answer would interfere unduly with the business of the meeting, involve the disclosure of confidential information, if the answer has already been published on the Group’s website or if it is not in the interests of the Company or the good order of the meeting that the question be answered. Holders of ordinary shares may receive a bonus issue of C Shares or a dividend and on liquidation may share in the assets of the Company.
Holders of not less than five per cent of the issued ordinary share capital of the Company may requisition a general meeting of the Company. Members who represent at least five per cent of the total voting rights of all the members who have a right to vote at the meeting or at least 100 members who can vote and hold shares paid up on average, per member, as to at least £100, can require the Company to include a matter (other than a proposed resolution) at an AGM unless it is defamatory, frivolous or vexatious. Alternatively, such members may require the Company to circulate a statement of not more than 1,000 words with respect to a matter referred to in a proposed resolution or other business to be dealt with at a general meeting. The members do not have to meet the costs of circulating the statement provided a valid request is received before the end of the financial year preceding the meeting.
Since January 2009, the Company has issued non-cumulative redeemable preference shares (C Shares) as an alternative to paying a cash dividend. Shareholders can choose to:
Any C Shares retained attract a dividend of 75 per cent of LIBOR on the 0.1p nominal value of each share, paid on a twice-yearly basis, and have limited voting rights. The Company has the option to compulsorily redeem the C Shares, at any time, if the aggregate number of C Shares in issue is less than ten per cent of the aggregate number of all C Shares issued, or on the acquisition or capital restructuring of the Company. On a return of capital on a winding-up, the holders of C Shares shall be entitled, in priority to any payment to the holders of ordinary shares, to the repayment of the nominal capital paid-up or credited as paid-up on the C Shares held by them, together with a sum equal to the outstanding preferential dividend which will have been accrued but not been paid until the date of return of capital.
The holders of C Shares are entitled to attend, speak and vote at a general meeting only if a resolution to wind up the Company is to be considered, in which case they may vote only on such resolution.
Certain rights attach to the special rights non-voting share (Special Share) issued to the Special Shareholder. Subject to the provisions of the Companies Act 2006, the Treasury Solicitor may redeem the Special Share at par at any time. The Special Share confers no rights to dividends but in the event of a winding-up it shall be repaid at its nominal value in priority to any other shares. Certain articles (in particular those relating to the foreign shareholding limit, disposals and the nationality of directors) that relate to the rights attached to the Special Share may only be altered with the consent of the Special Shareholder. The Special Shareholder is not entitled to vote at any general meeting or any other meeting of any class of shareholders.
There are no restrictions on transfer or limitations on the holding of the ordinary shares or C Shares other than under the Articles of Association (as described below), under restrictions imposed by law or regulation (for example, insider trading laws) or pursuant to the Company’s share dealing code. The Articles of Association provide that the Company should be and remain under United Kingdom control. As such, an individual foreign shareholding limit is set at 15 per cent of the aggregate votes attaching to the share capital of all classes (taken as a whole) and capable of being cast on a poll and to all other shares that the directors determine are to be included in the calculation of such holding.
There are no known arrangements under which financial rights carried by any of the shares in the Company are held by a person other than the holder of the shares and no known agreements between the holders of shares with restrictions on the transfer of shares or exercise of voting rights. No disposal may be made to a non-Group member which, alone or when aggregated with the same or a connected transaction, constitutes a disposal of the whole or a material part of either the nuclear business or the assets of the Group as a whole, without consent of the Special Shareholder.
At the AGM in 2010, authority was given to the directors to allot new ordinary shares up to a nominal value of £123,607,451, equivalent to one-third of the issued share capital of the Company as at February 10, 2010. In addition, a special resolution was passed to effect a disapplication of pre-emption rights for a maximum of five per cent of the issued share capital of the Company as at February 10, 2010. These authorities are valid until the AGM in 2011 and the directors propose to renew these authorities at that AGM.
In line with revised guidance issued by the Association of British Insurers in November 2009, it is proposed to seek a further authority at the AGM in 2011 to allot up to two-thirds of the total issued share capital, but only in the case of a rights issue. This is called the Second Section 551 amount. The Board believes that this additional authority will allow the Company to retain the maximum possible flexibility (consistent with evolving market practice) to respond to circumstances and opportunities as they arise. At the AGM in 2010, authority was given to the directors to allot new C Shares up to a nominal value of £350 million as an alternative to a cash dividend. Such authority expires at the conclusion of the AGM in 2011. The directors propose to renew this authority at the AGM in 2011.
At the AGM in 2010, the Company was authorised by shareholders to purchase up to 185,411,177 of its own ordinary shares representing ten per cent of its issued ordinary share capital as at February 10, 2010. The Company did not make use of this authority during 2010. The authority for the Company to purchase its own shares expires at the conclusion of the AGM in 2011 or 15 months from April 28, 2010 whichever is the earlier. A resolution to renew it will be proposed at that meeting.
Deadlines for exercising voting rights Electronic and paper proxy appointment and voting instructions must be received by the Company’s Registrar not less than 48 hours before a general meeting.
Voting rights for employee share plan shares Shares are held in various employee benefit trusts for the purpose of satisfying awards made under the various employee share plans. For shares held in a nominee capacity or if plan/trust rules provide the participant with the right to vote in respect of specifically allocated shares, the trustee votes in line with the participants’ instructions. For shares that are not held absolutely on behalf of specific individuals, the general policy of the trustees, in accordance with investor protection guidelines, is to abstain from voting in respect of those shares.
At February 9, 2011, the following companies had notified an interest in the issued ordinary share capital of the Company in accordance with the Financial Services Authority’s Disclosure and Transparency Rules:
|Company||Date notified||% of issued ordinary share capital|
|AXA S.A.||January 11, 2010||4.90|
|BlackRock Inc.||September 3, 2010||5.02|
|Invesco Limited||February 4, 2008||6.91|
|Legal & General Group plc||October 14, 2009||3.96|