- Selection policy
- Conflict of interest management policy
- Voting policy
- Report on intermediation fees in 2012
- Handling of claims
1. Best selection policy for financial intermediaries
Since 1 November 2007, pursuant to the EU’s Markets in Financial Instruments Directive (MiFID), new legal and regulatory provisions have governed the provision of investment services. As a result, the provision of portfolio management services for third parties has been affected.
Within this framework, because of its provision of portfolio and mutual fund management services, Metropole Gestion is required to pursue a “best selection” policy concerning the brokers to which it transmits its clients’ orders for execution.
For this reason, Metropole Gestion has developed a policy for selecting the intermediaries to which it transmits the orders resulting from its decisions to trade financial instruments on behalf of its clients or the mutual funds it manages.
The intermediaries are selected by Metropole Gestion on the basis of, in particular, their recognised experience, reputation and skills concerning financial instruments and their responsiveness and human and technical resources, in order to be able to obtain the best possible result for executing the orders transmitted, mainly in consideration of criteria such as:
- transaction costs,
- timeliness of order transmission,
- execution and settlement probability,
- order size and type.
Additional criteria involved in Metropole Gestion’s selection of intermediaries include the various execution markets to which the chosen intermediary has access in order to execute the orders transmitted. As a result, Metropole Gestion gives its explicit consent to execution other than on regulated and futures markets in order not to deprive itself of the full extent of the offer available and to be in a position to obtain from its intermediaries the best possible result for its clients.
On a regular basis, Metropole Gestion checks the effectiveness of its established policy and in particular the execution quality of the intermediaries selected within the framework of this policy.When necessary, Metropole Gestion corrects any observed deficiencies.
2. Conflict of interest management policy
In accordance with its principles and the prevailing regulations resulting from the transposition of MiFID, Metropole Gestion has defined a policy for identifying, preventing and managing conflicts of interest.
A conflict of interest may arise when an investment services provider carries out activities either on behalf of a client or on a proprietary basis, which come or may come into conflict with the interests of another client or group of clients if these activities are not organised and verified in an appropriate manner.
The purpose of this policy is to:
- establish formal procedures for identifying situations giving rise to or likely to give rise to a conflict of interest involving an appreciable risk of harming clients’ interests,
- define the procedures to be followed and the steps to be taken with a view to managing these conflicts.
These mechanisms are characterised by, inter alia:
- a business line organisation devised to avoid giving rise to conflicts of interest and decisions being made by the company contrary to clients’ interests,
- procedures based on the principles of fairness in the processing of the orders placed with financial intermediaries, in particular in terms of the allocation of assets or financial instruments,
- an employee remuneration policy not based on purely commercial objectives.
If the organisational and administrative measures taken by Metropole Gestion to manage conflicts of interest do not suffice to guarantee with reasonable certainty that the risk of harming the client’s interests will be avoided, prior to acting in its name Metropole Gestion will inform the client clearly of the general nature and/or the source of the conflict of interest. This information will be provided to the client on a durable medium and will be sufficiently detailed so that the client can make an informed decision.
Metropole Gestion will maintain an effective conflict of interest management policy that is appropriate with respect to the size, organisation, nature, importance and complexity of its activity.
3. Voting policy
METROPOLE Gestion regards the effective exercising of voting rights as a key component of the relationship between a listed company and its shareholders. We are at present able to exercise our voting rights in respect of all the companies whose securities we hold in the portfolios
This document on METROPOLE Gestion’s voting policy sets out the principles we apply when exercising voting rights. It is not intended to address all the situations that could arise. We examine all the resolutions submitted for a shareholder vote and decide how we will vote solely with the protection of our clients’ interests in mind, in line with the principles and recommendations of the AFG (Association Française de Gestion) or with locally accepted best practice, and forward them to ISS.
As a signatory to the UN PRI (United Nations Principles for Responsible Investment), we ensure that our voting policy fully complies with the environmental, social and governance criteria set out in our transparency code, which is available on our website.
We reserve the right not to vote in specific cases where to do so would not be in our clients’ best interests. Thus, we would not vote if, for example, voting would incur prohibitive administrative costs, or voting would entail locking up securities for a long period, thereby limiting the managers’ freedom to act.
Depending on clients’ requirements, we report on how we have exercised voting rights. In accordance with the AMF’s General Regulation, we prepare a report describing how voting rights have been exercised during the previous financial year within four months of the end of said financial year. This report can be consulted at the registered office and on our website.
Our philosophy is to support the management of the companies in which we invest.
We actively analyse all the resolutions submitted to a shareholder vote in accordance with the following principles:
I. Protecting shareholders - Shareholders’ meetings
A. Informing shareholders
A listed company’s financial and extra-financial publications must enable its shareholders to vote in full knowledge of the facts.
Companies must keep an up-to-date version of their Articles of Association on their websites at all times.
Companies’ financial statements must be audited by external independent auditors and submitted to the shareholders for approval at the Ordinary General Meeting.
To facilitate voting, documents and information relating to General Meetings must be made available within the deadlines laid down in the relevant countries before the meeting is held (21 days in Europe).
Information relating to draft resolutions must be set out clearly.
B. Holding Annual General Meetings
We expect the listed companies in which we invest to hold their Annual General Meetings within a reasonable period after the end of the financial year. They should encourage shareholders to attend these meetings, either in person or through their website.
Certain important points must be described in detail at General Meetings:
- The company’s medium- and long-term strategic direction.
- The borrowing and dividend policy over three years.
- The company’s environmental and social policy.
C. Protecting minority shareholders
1. General principles
Listed companies have an obligation to protect and promote their shareholders’ interests.
Although the management is responsible for developing and implementing the strategy adopted by the Board of Directors, the shareholders must be consulted on important questions affecting the company and they are not obliged to vote in favour of proposals that could put them at a disadvantage or dilute their holdings.
If the law permits it, we are in favour of the record date system, which identifies who has the capacity of shareholder and is authorised to vote, rather than the system that involves locking up securities. If the record date system is not permitted by law, we recommend a revocable lock-up system, which limits the length of the period during which the securities can be locked up.
2. Equitable treatment of shareholders
- Voting rights
- Anti–takeover measures
- Rights issues
- Share buybacks
II. The Board
A. Senior management
The management of a listed public limited company (Société Anonyme), whether in the form of a single Board of Directors or in its dual form, a Supervisory Board and a Management Board, must act on behalf of and in the interest of all the shareholders. Its actions must be governed by transparency, responsibility, effectiveness and availability.
1. Separation of powers
In the case of a listed public limited company with a Board of Directors, we are in favour of the principle of the separation of powers by separating the functions of the Chairman of the Board and the Chief Executive Officer, or by adopting a structure with a Supervisory Board and a Management Board.
2. Independence of Directors
“Independent” Directors and members of the Supervisory Board who are ’free of interests’ play a specific role in advising and supervising the executive management and in protecting the shareholders’ interests.
To be considered to be ’free of interests’, a Director or member of the Supervisory Board should not be in a situation involving a potential conflict of interests.
Although national legislation differs as to the optimum number of ‘free of interests’ members of a Board and its committees, we expect the listed companies in which we invest to apply or even go beyond local best practice. The members who are ‘free of interests’ should be identified as such in the annual report, as should the criteria the company applied when appointing them as independents.
3. Availability and competence of the Directors
4. Diversity of the Board
5. Directors’ participation in the capital
i. Level of remuneration
ii. Transparency of remuneration
iii. Specific points for calculating Directors’ remuneration
- Stock options and free shares
- Severance packages
- Supplementary pensions
- Attendance fees: We prefer members of the Board to be paid for the work they perform. The amount of attendance fees must be consistent with the standards and practices in the company’s country and business sector, and must be appropriate for the company’s means. The allocation of attendance fees should reflect each Board member’s efforts and the amount of work performed, especially on specialised committees.
B. Specialised committees
We recommend that three committees be set up, with the task of preparing the Board’s work: the audit, selection and remuneration committees.
1. Remuneration committee
2. Audit committee
3. Selection committee
This committee’s role is to submit proposals relating to the search for and appointment of members of the Board and corporate officers. It must schedule the appointment of new Directors and ensure their successful integration within the company (training, site visits, meetings with executives, etc.).
This committee, comprising at least three members, must put in place a selection procedure and draft a report containing information on the choices made. This should be submitted to the General Meeting.
All fees paid to the auditors, for services of any kind, must be published in the annual report.
Fees paid to audit firms for other services must not be higher than those relating to the audit itself, so as to preserve the audit firm’s independence.
Investors can obtain the full policy document on exercising voting rights on request.
4. Report on intermediation fees in 2012
In fiscal year 2012, METROPOLE Gestion used investment decision-making and order execution services for the purpose of carrying out equity transactions.
In accordance with the provisions of Article 314-82 of the General Regulations of the Autorité des Marchés Financiers (French securities regulator), the breakdown of fees applied to investment decision-making and order execution services is as follows:
- 60% of total intermediation fees for investment-decision making services;
- 40% of total intermediation fees for order execution services.
In 2012, METROPOLE Gestion did not enter into shared fee agreements with market intermediaries.
The measures implemented to prevent or handle any conflicts of interest in the choice of service providers are defined and governed in the Intermediary Selection Policy and the Conflicts of Interest Management Policy.
5. Handling of claims
In accordance with the regulations in force, METROPOLE Gestion has introduced a procedure for handling any claims that it may receive from its clients. As indicated previously, "a claim is understood to be a declaration by the client of his/her dissatisfaction with the professional involved. A request for information, for opinion, for explanation or for a service is not a claim.” Any claim may be sent to METROPOLE Gestion, 9 Rue des Filles Saint-Thomas, 75002 Paris, France. Unless a response is given within ten business days of receiving the complaint, the client will be sent a letter acknowledging receipt of the claim. Other than in specific circumstances, which must be explained to the client, the management company will send the client a reply within two months from receipt of the claim. In the event of a persisting disagreement, the client should contact the AMF Mediator (Médiateur de l’Autorité des marchés financiers), 17 place de la Bourse, 75082 Paris Cedex 02.