Shareholders have the right to appoint proxies to attend and vote at general meetings on their behalf, by completing and returning a proxy form.

Listing Rule 9.3.6(4) provides that a listed company must ensure that a proxy form issued to shareholders states that if it is returned without an indication as to how to vote on a particular matter, the proxy will exercise his discretion as to whether, and if so, how, he votes.

The position is, however, different under Spanish law, where, in certain corporate scenarios (including a company’s annual general meeting), proxy forms must, in order to be valid, include an indication as to how the proxy must cast its vote.

The reason for this is that, under Spanish law, whenever proxies are “solicited publicly” from shareholders or whenever directors, custodians or registrars solicit proxies from shareholders, the proxy form must, to be valid, contain an indication of the way in which the proxy will cast the vote in the absence of instructions.

Spanish law further provides that where a single person is acting as proxy for more than three shareholders, he or she is deemed to have solicited proxies publicly. As in the UK, at a Spanish company’s annual general meeting (for instance) a Chairman will usually hold thousands of proxies and therefore these proxy solicitation rules will apply.

In order to ensure compliance with the proxy solicitation rules, the Shareholder Meeting Regulations provide that, in the event that a shareholder validly appoints a proxy but does not include voting instructions, the shareholder shall be deemed to have instructed the proxy to vote in favour of all resolutions proposed by the Board. Therefore, in order for the proxy appointment to be valid under Spanish law, the proxy form could not include the wording required by Listing Rule 9.3.6(4).

Listing Rule 1.4.2 addresses the situation where the law of the jurisdiction in which an overseas company is incorporated conflicts with the requirements set out in the Listing Rules, the position being that an overseas listed company must comply with the Listing Rules to the extent that compliance is not contrary to its local law.

The UKLA has confirmed that the position under Spanish law concerning proxy forms is acceptable provided that all relevant information is included in the proxy forms and the proxy forms are sufficiently clear for shareholders to understand. The UKLA has also confirmed that, provided that all relevant information is included in the proxy form and is sufficiently clear enough for shareholders to understand, IAG’s inability to comply with Listing Rule 9.3.6(4) would not prejudice its application for listing.