Hong Kong has come out on top of a new survey by the Asian Corporate Governance Association (ACGA) regarding proxy voting of shares for institutional investors. But even Hong Kong lags far behind the benchmark markets of Australia, the United Kingdom and the United States.

ôRemoving the many impediments to proxy voting would, we believe, contribute to stronger and more efficient capital-market development in Asia,ö says Jamie Allen, secretary-general of the ACGA.

The report was co-sponsored by CLSA and TIAA-CREF, one of AmericaÆs most progressive public pension funds, and presented at CLSA's recent investorsÆ conference.

Proxy voting is a game of two halves. The first is getting information to shareholders prior to general meetings. The second is the delivery, collating and counting of votes. Informing investors is, the report says, ôin a parlous stateö. Implementation ôis, if anything, in worse shapeö.

Allen says it matters that proxy voting is not fair and efficient. ôVoting is a basic right of share ownership and issuers have a legal and moral obligation to facilitate it.ö Hampering cross-border investorsÆ ability to vote their shares flies in the face of the regionÆs attempts to develop its capital markets. And institutional investors worldwide are under increasing pressure to vote their shares.

The survey quizzed 48 institutional investors, most of which are large organisations domiciled in the US or Europe but with a long history of investing in Asia. The survey also included some Asia-domiciled institutions or fund management companies. But nearly half of these didnÆt respond to the survey, either because the institution doesnÆt vote its share (and in some cases didnÆt know it could), or because it votes in the US or Europe but not yet in Asia (or if it does, it only votes in Japan).

The remaining respondents manage a total of $3 trillion of assets, with an average size of $156 billion, and invest 6-21% of AUM into Asia.

Among the key findings: Hong Kong is the regional leader but scores well below Australia, the UK and the US; and Japan and Taiwan have the weakest voting systems, with Korea not far behind (China wasnÆt ranked).

The report recommends notices and agendas be published at least a month before general meetings, preferably with an English translation; that custodians be able to give institutions at least two weeks after publishing the agenda to vote; that regulators upgrade their listing rules to require a higher standard of information to be provided, and governments and stock exchanges consider establishing national electronic voting systems; institutions and regulators should insist on voting by ballet, not by hand; investors should vote against any resolutions that bundle separate items together, as a matter of policy; issuers should hire independent auditors to ensure the voting has been fair.