Shareholder rights, letters to MPs and questions at AGMs - An Update

Over 20 members have to my knowledge written to their MPs (as we requested) and a number of members have asked questions at AGMs. We have certainly raised the issue.

The Minister (or most likely his civil servants) have produced what looks like a standard response which is being sent to those MPs who contacted Greg Clarke MP, the Secretary of State. Their response argues that the UK does not have to follow the intent of the EU Shareholder Rights Directive and can continue to have the nominee as the shareholder in UK Company Law.

Some companies appear to have referred our AGM questions to their registrars and have written back to our members with statements along the lines of

“However, it appears that a major change would be required in how shareholdings are recorded to effect this which may have legal and regulatory implications and therefore it is not possible at this time to confirm our support [to our suggestion that the name of the end investor and email address is shown on the shareholder register] without understanding any proposals to achieve this.” This was from Tate and Lyle.

“Initial discussions with our registrar, Equiniti, confirmed that there are a large number of considerations which would need to be resolved before having nominee-held shareholdings recorded on the company’s share register, including the complications of the legal relationships between the company, registered nominee holder and the underlying shareholders. In addition, flagged challenges and risks include for example, ensuring email addresses remain current, and ensuring accounts are not susceptible to fraud. In short it is not straightforward.… Understanding the finer detail and the associated implications is key before we are in a position to confirm our support.” This was from Burberry.

This is a classic defensive strategy when someone does not want to seriously engage with a new idea. They note that “shareholder rights are important to us”, but then come out with a list of lame excuses which they say are not their responsibility. And they say it is complex – or not straightforward – and that they cannot give support until they know the detailed proposal.

I think we have got them rattled! There have been a number of good articles in the press which are supportive of our aims. The politicians are in danger of being out of step with the general population who elect them. Here are 3 recent articles:

https://www.thetimes.co.uk/article/shareholders-are-denied-a-voice-nc9tlngzm

http://www.thisismoney.co.uk/money/markets/article-6024275/Dont-miss-investor-revolution-taking-big-firms-like-Royal-Mail-Persimmon-task.html

https://www.ft.com/content/929f66b8-7fa4-11e8-8e67-1e1a0846c475

Open Letter

The next step in our plan is an open letter which we would like might FTSE Chairman and other key opinion formers to sign and show their support for the broad principles we wish to be recognised. The current draft begins:

We the undersigned:

Support shareholder democracy
Want all shareholders to vote
Want all shareholders to be treated equally
Recognise that the end investor is in many cases not the nominee.

The draft letter makes a number of other points including:

It is estimated that currently only 6% of individual shareholders’ shares are voted. Amongst the reasons for this are the difficulties of shareholders obtaining information and voting forms.
Some nominees choose not to pass on information about AGMs, annual reports, etc to the end investor. Nominees are not required, by law, to pass on such information and many nominees argue that the service they provide keeps the costs down and meets the needs of their clients.
Many nominees fail to promote their services such as voting, proxy letters to attend AGMs as corporate representatives of the nominee (in respect of the shares held by the end investor), notice of publication of annual reports and AGM information; and some charge extra for such services. Nominees’ voting services are difficult and time consuming for individual investors to use.

Platform Providers

Another step in our plan is to talk to platform providers and encourage them to provide better services to their customers. What is needed is a neat, slick service that makes it very easy for individual investors to vote as a collective and hence empowers them by aggregating individuals votes together.

People ask me what else they can do?

If you are attending any AGMs then please do ask the question we have suggested, see https://www.sharesoc.org/sharesoc-news/protect-your-rights-act-now/

The suggested question is as follows:

Question for the AGM

Please can you tell me what percentage of your shares are held by individual investors?
And do you know what percentage of these individuals have voted at this AGM by proxy?
Can you tell me what percentage of your individual shareholders do not get to see your annual report, and do not get notification of the AGM or voting forms?

Will you support me and ShareSoc, the UK Individual Shareholders Society, in lobbying the UK government to put the end investor’s name and email address on the shareholder register, so that you can more easily communicate with your shareholders?

The EU Shareholder Rights Directive has a clear intent that the end investor should be identified on the shareholder register and not just the Nominee. Will you lobby the UK government to implement the clear intent of the EU Shareholder Rights Directive and hence protect the rights of Individual Shareholders?

To achieve maximum effect, email the company secretary before the AGM with a copy of your question. This will ensure they prepare a considered response at the AGM. Please copy your email to info@sharesoc.org where we will keep a register of companies questioned.

And if you have not yet written to your MP, then please do so now. It is not too late and the larger the number of letters written the more the message will get through and the greater our chances of success.

Cliff Weight, 16 August 2018

Post Date: August 17, 2018

Group description:	Our group is interested in sustainable investing and our goal is to identify and evaluate businesses that will thrive through innovation and their transition to a ‘One Planet Economy’. By leveraging the skills of group members, we aim to deeply understand these businesses, particularly focusing on how they develop long-term valuable benefits for their customers. Each year, we plan to evaluate around seven businesses to identify opportunities where our valuation exceeds the market price. A successful outcome is defined as achieving a compound annual growth rate (CAGR), including dividends, of 10% over a decade.
Meeting Type/Venue:	Meetings are in-person in a pub near to Waterloo station in London.
Meeting Frequency/Timing:	Meetings are bi-monthly on a Monday from 10:45am to 4:30pm. Members are expected to also pay for their own lunch which secures the group free use of a private room in the pub. The cost is expected to be £35-40 per person, per meeting, in addition to your SIGnet membership fee.

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Shareholder rights, letters to MPs and questions at AGMs – An Update

Leave a Comment Click here to cancel reply.

Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	Group focused on active investing, primarily in small / medium cap UK equities.
Meeting Type/Venue:	Regular Zoom meetings interspersed with occasional face to face meetings and social activities in the North West.
Meeting Frequency/Timing:	Monthly on Saturdays at 10am.