Investor group Sharesoc has levelled criticism at Royal Bank of Scotland after it rejected a proposal to put a shareholder committee in place.
In December, ShareSoc and the UK Shareholders’ Association (UKSA) gathered 168 votes from RBS investors proposing the bank create a committee which would look to improve its corporate governance.
However, having taken legal advice, the bank – which is largely owned by British taxpayers – decided not to take the proposal forward at the next annual general meeting.
In a statement, RBS said: “The proposed resolution was considered to be inconsistent with the law and the company’s constitution.”
RBS has grappled with issues since the financial crisis when it was rescued by the UK government, and last year it agreed to pay out $1.1bn (£846m) to settle two lawsuits linked to the sale of mortgage-backed securities.
But Sharesoc have accused RBS of obstructing the democracy of shareholders by not presenting this proposal at the AGM.
The organisation also said the bank had failed to provide more clarification on the grounds for its rejection.
While directors can advise shareholders to vote against a requisition, the Sharesoc chairman Mark Northway said RBS should not be using “tenuous technical excuses” to avoid putting the proposal to investors.
Mr Northway said: "It is disappointing that, instead of leading from the front on corporate governance, RBS have instead chosen to try to thwart this initiative.
“This behaviour by the directors of a company underlines the broad reticence of UK boards to address the breakdown of the agency model and the rights of shareholders.”
The Sharesoc chair also argued there is more work to do at RBS before the government puts its 73 per cent holding back into the market.
Howard Davies, the chairman of RBS, said: “Acknowledging past mistakes and recognising the part that RBS must play in reform, we continue to develop our culture and priorities.”
He said the bank had looked closely at how it can improve existing arrangements, adding: “We believe that RBS would benefit from strengthening the voice of our employees, customers and wider stakeholders.”
“Stakeholder representation is hugely important to us; we want to be trusted, respected and valued by all of our stakeholders,” Mr Davies said.
The government published a green paper in November which outlined a number of measures to improve governance, such as addressing high executive pay.
RBS said it was supporting this initiative and had contributed feedback to the corporate governance reform.
Mr Davies added: “We will continue to engage with all relevant bodies and are committed to embracing and supporting the government’s call for reform, which we believe will enhance engagement across UK industry as a whole.”