2.04 The 2024 Directors' Report does not say how the votes on Employees' Share Trust shares are exercised, nor the percentage of share capital in each class
UK Company A · a UK-listed medical technology group · Compliance or disclosure gap
In brief
As a company with voting shares on a UK regulated market, the Company must give in its Directors' Report how voting rights are exercised on shares held for an employees' share scheme where the employees cannot exercise them directly, and, where there are two or more classes of shares, the percentage of total share capital each class represents. The 2024 index sends readers to page 175 for '[wording masked]', but that page deals only with ordinary-share rights; the Employees' Share Trust held [n] shares at [date] and nothing in the report says how their votes are exercised. The report also describes the ordinary and deferred share classes without giving the percentage of capital each represents. The 2025 report adds a paragraph that [wording masked].
The evidence, as filed
Further pages withheld to protect the company’s identity (six): Annual Report 2024, page 174; Annual Report 2025, page 195; Annual Report 2024, page 241; Annual Report 2024, page 176; Annual Report 2024, page 165; Annual Report 2024, page 175. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
Names, figures, dates, logos and any wording that could be searched back to the company are boxed out in grey; the point is highlighted in yellow.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Index: '[wording masked] [n]'; page 175 covers ordinary-share rights only; Employees' Share Trust held [n] shares at [date]; two classes (ordinary [n] [currency units] and [n] deferred shares of [amount] with no percentage of total share capital given. | What the rule requires A paragraph stating how the voting rights on shares held by the Employees' Share Trust are exercised (as the 2025 report now does: [wording masked] a statement that the ordinary shares represent substantially all (about [n]%) and the deferred shares about [n]% of total share capital. |
The rule
SI 2008/410 Schedule 7 paragraph 13(1)
Version relied on: Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410), in force from April 2008, as amended (the directors’ remuneration report Schedule 8 as substituted from October 2013); revised text, legislation.gov.uk
This Part of this Schedule applies to the directors' report for a financial year if the company had securities carrying voting rights admitted to trading on a [F13UK] regulated market at the end of that year.
SI 2008/410 Schedule 7 paragraph 13(2)(a)(ii)
Version relied on: Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410), in force from April 2008, as amended (the directors’ remuneration report Schedule 8 as substituted from October 2013); revised text, legislation.gov.uk
where there are two or more such classes, the percentage of the total share capital represented by each class
SI 2008/410 Schedule 7 paragraph 13(2)(e)
Version relied on: Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410), in force from April 2008, as amended (the directors’ remuneration report Schedule 8 as substituted from October 2013); revised text, legislation.gov.uk
the company has an employees' share scheme, and(ii)shares to which the scheme relates have rights with regard to control of the company that are not exercisable directly by the employees,how those rights are exercisable
Why it applies here: two items that paragraph 13(2) of Schedule 7 requires are not in the 2024 Directors' Report; the first was supplied the following year.
Why it matters
- Shareholders assessing control and voting could not tell from the 2024 report whether the trust's shares are voted, and the capital-structure statement is incomplete.
- The voting item is already put right in 2025; the percentage by class is still missing.
Shareholders assessing control and voting could not tell from the 2024 report whether the Trust's shares are voted, and the capital-structure statement is incomplete; both are items the Directors' Report must contain.
Exposure
A Financial Reporting Council Corporate Reporting Review question; the voting item is already cured in the 2025 report, so no revision of the 2024 report would be expected.
Our workings
the index lists '[wording masked]' at Directors' Report page 175. Page [n] covers dividends, voting at general meetings, resolutions and variation of rights for ordinary shares; it says nothing about the Trust. Note 19.2 says the 2004 Employees' Share Trust holds shares for the long-term incentive plans, is administered by an independent trust company and waives most dividends, and the Note 19 table shows the Trust holding [n] shares at [date]; no page says how the trustee uses the votes on them. The 2025 report adds: '[wording masked]'.
there are two classes of shares, ordinary shares of [n] [currency units] and [n] deferred shares of [amount] (p.176; Note 19.1, p.240, where the deferred class prints as '–' in $ million); no percentage of total share capital is given for either class in either year.
[n] x [amount] = [amount]; at [amount] = [amount], i.e. [amount] against ordinary capital of [amount], so the deferred shares are about [n]% of total share capital.
| Item | Computation | Result |
|---|---|---|
| Deferred shares at nominal value | [n] x [amount] | [amount] |
| In [currency] at the report's rate | [n] x [n] | [amount] = [amount] |
| Deferred shares as share of total capital | [n] / ([n] + [n]) | [n]% |
| Ordinary shares as share of total capital | 100% - [n]% | [n]% |
Management’s best defence, and our reply
The company could argue that the deferred shares are nominal (they print as a dash in $ million) so the percentages are self-evident, and that the Trust's shares are a small holding whose votes are, in practice, not cast. It could add that the 2025 report now carries the voting statement. However, paragraph 13(2) names both items expressly for every company with voting shares on a regulated market, the 2024 index promised the employee share scheme item on a page that does not contain it, and the 2025 change confirms the company regards the item as applicable; materiality of the amounts does not remove a stated content requirement of the Directors' Report.
The fix
- Keep the 2025 paragraph on the Trust's voting rights and add: 'The ordinary shares represent more than 100% and the deferred shares less than [n]% of the Company's total issued share capital.'
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | The index places the employee share scheme rights on page 175 | Document | Annual Report 2024, page 174 |
| 2 | The company has an employees' share scheme whose shares are held by a trust | Document | Annual Report 2024, page 241 |
| 3 | The shares are held by an independent trustee, not by the employees | Document | Annual Report 2024, page 241 |
| 4 | The Trust held [n] shares at [date] | Document | Annual Report 2024, page 242 |
| 5 | A second class of shares exists: [n] deferred shares of [amount] | Document | Annual Report 2024, page 176 |
| 6 | Note 19.1: ordinary capital [amount]; the deferred class prints as a dash in $ million | Document | Annual Report 2024, page 240 |
| 7 | The report's own sterling-[currency] rate for 2024 | Document | Annual Report 2024, page 165 |
| 8 | The 2025 report adds the employee share scheme voting statement | Document | Annual Report 2025, page 195 |
Absence check
- Document
- Annual Report 2024
- Where it would appear
- Rights attaching to ordinary shares
- What is missing
- How the voting rights on shares held by the Employees' Share Trust are exercised, which the index places on this page
- Pages looked at
- p.174-177 (Directors' Report), p.241-242 (Note 19)
- Result
- 'employee share scheme' hits only the index line on p.174; 'Employees’ Share Trust' hits p.209 (EPS policy excludes Trust shares), [n] (purpose, trustee, dividend waiver) and [n] (share movements), none of which says how the votes are exercised; 'right to vote' hits p.175 only in the description of polls on ordinary shares; the other terms do not hit
Absence check
- Document
- Annual Report 2024
- Where it would appear
- Deferred shares
- What is missing
- The percentage of total share capital represented by the ordinary and the deferred share classes
- Pages looked at
- p.174-177 (Directors' Report), p.240-241 (Note 19.1)
- Result
- None of the terms hits anywhere in the report
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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