Nikko Asset Management Europe Ltd

PROXY VOTING POLICY UK ADDENDUMISSUED: FEBRUARY 2021
REVISED: AUGUST 2024

Nikko Asset Management Europe Ltd
Level 5, City Tower
40 Basinghall Street
LondonEC2V 5DE
Phone: +44 (0)20 7796 9866
Fax: +44 (0)20 7796 9816
Authorised and Regulated by the Financial Conduct Authority
Number 122084

Purpose and Scope
The purpose of this Nikko Asset Management Group Proxy Voting Policy UK Addendum (the“Policy”) is to supplement the Group Proxy Voting Policy as necessary to reflect its domestic
application to employees of Nikko Asset Management Europe Ltd (we refer to ourselves in thispolicy as “NAME”, “we” or “us”) and to describe how NAME participates in shareholder
meetings and applies the voting principles and guidelines, set out below, to companies underinvestment by NAME. The scope of this Policy applies to the portfolios managed by the Global
Equities team as voting rights are mainly issued in equity shares.

Statement of Policy:
NAME believes proxy voting is a key stewardship component in the ongoing dialogue withcompanies in which we invest and as such, is an important aspect of Future Quality Investing.
We are committed to ensuring consistent exercise of voting rights and voting on all shares
held, where it is in the best interest of our clients. Through implementation of our Proxy Voting
Policy, we aim to enhance the long-term value of our shareholdings and to foster corporate
governance best practices.
Further we believe that the long-term impact of environmental, social and governance (“ESG”)
issues can materially affect corporate valuations. By incorporating the consideration of ESG
factors into our investment process and daily business, we aim to positively influence investor
returns and corporate decision making, and thereby enable effective stewardship.

Main corporate governance principles that we expect from our investee companies:
 Acting in the long-term interest of shareholders
 Protecting shareholder rights
 Maintaining high integrity standards in corporate behaviour
 Ensuring an independent and efficient board structure Aligning corporate incentive structures and remuneration with long-term interests ofshareholders
 Disclosing accurate, timely and transparent financial and corporate governanceinformation
 Ensuring strong environmental and social performance and disclosures

Proxy voting process: We use the external provider Institutional Shareholder Services (“ISS”) as an advisory
research tool but, client permitting, final voting decisions are at the total discretion of the
global equity team. Issues raised by external advisors, such as ISS, are considered but theseguidelines will take precedence.
Page 3 We apply our voting principles with full consideration to a company’s circumstances,following investigation of any concerns and in line with our Future Quality investment
philosophy and voting guidelines. All votes are directly instructed by the investment teamafter reviewing relevant materials for the shareholder meeting.
 Votes are cast on all shares, where there are no legal, client or technical constraints. Since
votes are cast with regard to the long-term interests of investors and with regard to thesame Future Quality investment philosophy, we aim for voting to be consistent across all
NAME’s holdings. There is the possibility that legal or fiduciary reasons lead to an
exception to this rule. In the event of exceptions, the voting records will accurately reflect
these differences.
 Where our proxy voting principles or other general corporate governance best practiceprinciples are not met, we would vote against a resolution and attempt to further engage
with the investee firm.
 Specifically on climate change, our analysis considers the physical, liability and transition
risks associated with the changing climate and our engagement will encourage effective
climate disclosure where appropriate.

Disclosures

 Proxy voting records & client communications: We publicly disclose a summary of our
proxy voting activity on a quarterly basis, including disclosure where we have voted
against management. Client specific records and voting rationales are available to clientson request.
 Policies: This voting policy, along our Group Proxy Voting policy, is available for all
stakeholders on our website.
 Nikko Asset Management Global Stewardship Report: The report can be found on our
website and provides further insight on our approach to proxy voting at firm-level,
including relevant voting case studies.

Voting principles & guidelines
The principles & guidelines set out below are the general framework for corporate governanceand proxy voting matters. They apply to the management of all Global Equity investments
unless otherwise specified by discrete mandates where client instructions have been received
in relation to proxy voting and corporate governance matters.
The proxy voting principles underpin the above Statement of Policy which is in line with those
applied by the wider Nikko Asset Management group.
1. Principles
For all Global equity mandates with client agreement, the Global Equity team particularly
focuses on the following points when exercising voting rights in order to ensure monitoring of
the governance of the company being invested in and to increase and prevent damage ofshareholder value:

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Principle 1: Shareholder Return
With regard to the disposition of surplus, the Global Equity team places emphasis on
ways to provide sufficient returns to shareholders over the medium to long-term andto provide adequate accountability to shareholders, taking into consideration not only
total return ratio levels, such as shareholder dividends and stock purchase plan, butalso extensive internal reserves and investment plans based on future business plans.
Principle 2: The responsibilities of the Board
The separation of executive and supervisory functions at board level is necessary torealize effective corporate governance. The Board has a supervisory role, providing
general oversight of a company and its management. For this reason, we would expect
a majority of a board to be independent of management. A company's board of
directors must be appropriate size and composition to ensure adequate discussions
take place and appropriate decisions are made.
Principle 3: Executive Compensation System
The Global Equity team positively assesses executive compensation systems that offer
incentives and increase shareholder value, such as those linked to company
performance. At the same time, appropriate levels of compensation in terms ofcompany performance and profit distribution to shareholders should be required while
the system itself should ensure sufficient accountability to shareholders.
Principle 4: Company Control and Takeover Defences
The Global Equity Team is opposed to resolutions aimed at maintaining company
control or that prevent corporate takeover. Acquisition proposals and/or defensive
strategies may be assessed to the extent that the existence of such acquisition risks areclear and existing shareholder value would not be damaged.
Principle 5: Business Restructuring
The Global Equity Team scrutinizes whether or not the restructuring of businessthrough mergers and acquisitions is the best option for a company from the viewpointof consistency with its management strategy and enhancement of shareholder value
in the medium to long-term. In addition, the valuation of a company's acquisition pricemust be fair price which is calculated by a neutral third party.
Principle 6: Capital Policy
Whether or not resolutions on the issuing of company stock are an appropriate capital
policy should be determined cautiously, taking into account the company's

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management strategy, financial standing and market environment. In particular, theGlobal Equity Team does not evaluate such capital increases positive if there is apossibility that it will significantly dilute the equity of existing shareholders and placethem in an overall disadvantageous position.
Principle 7: Environmental & Social Commitments
The Global Equity team believes a portfolio with a low carbon intensity and withoutmajor environmental, social or governance controversies represents a minimum
safeguard for a portfolio of companies able to sustain high returns into the future. To
achieve this, the Global Equity team encourages full disclosure of a company’s carbon
footprint, engage actively on ESG controversies and, where strategy allows, will voteagainst a management team that is not addressing these concerns. The team will also
support resolutions on Environmental & Social matters that it believes will reinforce
long term value creation and the Future Quality attributes of the underlying
investment.

2. Guidelines
The guidelines below are not intended to operate as a prescriptive set of rules for proxy voting.
They have been designed to provide a general framework for clients and investee companies
to understand our views on corporate governance matters and our likely response when asked
to vote. Naturally, they will evolve as time passes and circumstances change.
Below are corporate governance matters which we consider on our investee companies:
2.1. Board of Directors
The Board of Directors of Companies generally performs the following key functions
on behalf of shareholders, inter alia:


Approves and oversees corporate strategy

Appoints and oversees the CEO / Managing DirectorProvides expertise in relevant fields

Communicates financial performance to shareholders



Sets executive and recommends own remuneration and incentive structuresDesigns and implements appropriate risk management proceduresSupervises the audit functionPrepares and plans for senior management succession.

It is therefore imperative that the Board of a company operates in a functional andproductive fashion.

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Independence - The majority of directors should be independent, except in exceptional
circumstances. By ‘independent”, we mean independent of management. It is criticalfor board decisions to be made after discussion and thinking unconstrained bymanagement. We are therefore unlikely to support relatively large numbers ofexecutive directors on the Board. In most cases, the Chief Executive Officer and theChief Financial Officer (or equivalent) will be sufficient. We recommend that the annual
report disclose which directors qualify as independent directors and the principles
supporting their independence.
Competence - Directors should be chosen for their expertise in a particular field
relevant to the normal activities of the company. We encourage Boards to seek an
independent performance assessment on the election and re-election of a director.
Each director should be informed upon appointment of the reasons for his / her
selection and the duties expected. These reasons should be disclosed to the market.
Incompetent or consistently underperforming directors should be asked to resign assoon as possible.
Diversity - We support a diversity of views in the boardroom, provided it supports thebest long-term economic interests of shareholders. We believe a balance of skills andexperience is desirable. We expect that a director will bring an independent mind tobear when contributing to the board’s decision-making process.
Commitment - We expect all directors to commit enough time to company affairs tosoundly perform their duties. We believe that there is a limit to the number of
directorships any one individual can accept due to time constraints. The limit must be
considered in each set of circumstances.
Board Size - The size and complexity of the company will normally determine theappropriate size of the board. There should be a sufficient number of directors toensure that all the major functions of the board and affairs of the company are
addressed with maximum efficiency.
Board Terms - We do not support minimum terms for directors, unless we are able toindependently assess the contribution of each. The onus of proof should be on thecompany. We are far more interested in the level of commitment and contribution thanarbitrary terms of service.
Communication with Shareholders - One of the most important roles of the Board
is to communicate with shareholders. We expect the board to be open and candid withshareholders about the current and likely performance of the company. This should
extend to reasonable disclosure of financials and risk management policies. We
strongly encourage directors to make themselves more accessible to shareholders. In
cases where disclosure and communication have deteriorated during our time asshareholders of the company, we will generally inform the company of ourdissatisfaction, as a first step. We reserve our right to vote against directors if we areunsatisfied with the Board’s progress in this area.
Share Ownership - We believe that directors should hold meaningful equity in thecompany, subject to their personal circumstances. This aligns their interests with other

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shareholders and exposes them to down-side risk in the event of poor performance.
We also encourage directors to take a meaningful portion of their fees in the form ofequity.
Related Party Transactions - Even though virtually all related party transactions are
purported to be structured on an “arms-length” basis or on “normal commercial
terms”, we are not in favour of the practice of directors generating income from thecompany outside of directors’ fees or equity dividends. We recommend that directors
avoid the risk of actual or perceived conflicts of interest. If we perceive there is a conflictof interest, we will vote against the re-election of the relevant director.
Performance Evaluation - We expect the Board to adopt a formal performanceassessment process. This should cover its own performance, including individual
directors, as well as evaluate management and company performance. This should be
carried out at regular intervals and be disclosed to shareholders in interim and annual
reports. We recommend that independent directors meet as a group to review
performance at regular intervals, in addition.
Nomination Committee - A nomination committee should be established to monitor
the performance of the Board, assess competency requirements, and provide
recommendations for the appointment and removal of directors. We expect theNomination committee to be majority independent of management.
Risk Management - It is essential that the Board develops a detailed policy to manage
risk and internal controls within the organisation. Key risks should be identified andmaterial changes in the company’s risk profile should be communicated toshareholders. The risk profile should be reviewed regularly.
Code of Conduct - A code of conduct should be adopted to guide the behaviour of
directors and senior management. It is intended that a code will promote ethical andresponsible behaviour. The code should not be limited to policies regarding trading incompany securities.
“Whistle-Blowing” - The Board should adopt favourable policies for theencouragement and protection of “whistleblowers”. This policy should also apply to
directors of the company.
2.2. Remuneration
General Policy - Remuneration for senior executives should look to align with longterm shareholders’ interest. A reasonable “base” should be paid for the services of theexecutive on a day-to-day basis, generally depending upon the size and complexity ofthe business involved. However, a material percentage of total remuneration should
be “at-risk” and tied to clearly defined performance targets as part of incentive plans.
Compensation Committee - The Board’s compensation committee should comprisea majority of independent directors. We encourage the Board to resist the temptationof relying wholly on compensation consultants to set remuneration rates. Common
sense and reasonableness should be the guiding principles. Consultants should be
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appointed independently of management. In case of any major concerns about pay
practices, we may hold remuneration committee members accountable and voteagainst their re-election.
Incentive Plans
Long Term vs. Short Term - Incentive plans - particularly long-term plans should be linked to the equity of the company so that they align managementwith the best long-term economic interests of all shareholders. We are notagainst cash payments resulting from short-term incentive plans. As the reward
is cash, these plans are vastly more transparent and easier to value. Rigid
performance hurdles should apply to both short and long-term incentive plans,
without exception. We expect that hurdles would have both “internal” and“external” components. The internal component should be related to thefundamentals of the company under the direct control of management. An
external reference (e.g. peer group comparison) measures performance ofmanagement against their peers in related companies. All plans should bedesigned to reward superior, and not average, performance. The rewards
available under any plan should be reasonable in all the circumstances.
Material details of each incentive plan should be disclosed to the market.
Favourable Loans to Executives - We support the provision of company loans
to executives for the purpose of buying equity, provided reasonable collateralis secured and the principal amount is not “forgiven” at some point in future.
The quantum involved should not place any executive under financial stress or
encourage management focus on short-term results at the expense of the longterm economic interests of all shareholders. As these loans-for-equity expose
executives to both upside and downside risk, we believe they are a superiormechanism to align management’s interests with shareholders. They also
display an increased level of personal financial commitment to the company,
which we generally view positively. When a company offers interest rates thatare lower than prevailing commercial rates, it should be disclosed to themarket.
Stock Options - We are interested in rewarding executives for capably
managing the invested capital base of the company. We recognise options as
one element of management remuneration and if structured correctly canprovide a powerful incentivisation. The award of options must be reasonable
in the circumstances and reward superior performance only. We believe option
grants should not be excessive and we will vote against any issuance greaterthan 10% of existing share capital unless there are exceptional circumstances.
In addition, options should not be re-priced, except where the capital base has
been adjusted (e.g. rights issues etc.).
2.3. Audit Function

Page 9Audit Committee - Only independent directors should serve on the Audit Committee.
The Audit Committee should include members with a mix of appropriate skills andexperience to properly discharge their duties. The Audit Committee should ensure thatthe appointment of auditor is a transparent process. The Audit Committee should also
have a formal charter and be sufficiently empowered to meet its obligations.
External Auditors - The external accounting firm that performs principal audit work
should not perform any significant “non-audit” work, to preserve its independence. Allcompanies should disclose the length of service provided by an accounting firm forexternal audit work. Prior services for “non-audit” work by the same firm should also
be disclosed, including the quantum of fees paid.
2.4. Takeover Protection
We are opposed to proposals or transactions that seek to artificially entrench current
management and / or thwart takeover offers.
2.5. Shareholder Rights
We are strong advocates for the protection of shareholder rights and believe we should
see greater protection of shareholders, not less. The rights of shareholders areparamount. We generally do not support any proposal that removes or dilutes theserights. The burden of proof will always lie with the company. We recognise that there
will always be competing interests between shareholder groups. We will endeavour tosupport a course of action that is in the best long-term interests of our clients, asshareholders.
2.6 Appropriate Disclosure
We are advocates that appropriate environmental & social disclosure is required forinvestors to understand the related risks and opportunities. We would favour increased
disclosure if we believe that would enhance our understanding of the company’s
Future Quality characteristics.

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