Corporate Governance

Corporate Governance News

This section on Corporate Governance provides investors with the latest topical news plus some informal comments and insights from ShareSoc’s directors and other contributors.

Essar Energy and Camkids – spot the connection

Essar Energy (ESSR) is a FTSE-250 Indian oil company where minority shareholders are none too happy about a proposal from the majority owners (the Ruia family) to make a bid for the company at 70p. It floated at 420p in 2010 on the London Stock Exchange and joined the FTSE-100, but it has shown substantial losses in the last two years. Standard Life has described the move as "cynical opportunism" and seem to believe that the offer undervalues the future prospects ...

Barclays – Who benefits?

Barclays Bank announced their final results yesterday. The results did not match expectations and the shares fell 4% on the day. The national media led with the story that the company had still increased the bonus pool even so, and that the company now pays out more in bonuses than it pays in dividends to shareholders. The CEO, Antony Jenkins,  gave the usual excuse for the high pay levels - that they need to compete on the international scene for top class ...

Who runs investment trusts?

Investment trusts are of course normal public companies, with a board of directors who are responsible to shareholders. Or to quote from a good article on these long established and low cost investment funds by Ian Cowie in the latest Aberdeen newsletter: "Unlike unit trusts, every investment trust has a board of directors whose duty is to represent the interests of investors rather than any fund management company. Investment trust directors can - and occasionally do - sack fund managers who ...

Eurofinuse adopts manifesto

Eurofinuse, a representative body for European shareholder organisations of which ShareSoc is a Member, has adopted a "Better Finance Manifesto". They are launching this before the European Parliament elections in May to try and influence politicians to adopt policies to protect savers and investors over the coming years.Although some of the manifesto policies are focussed on problems in other countries in Europe than the UK, there are many meritorious aspects. Here's just a few of the issues they cover:1. That there ...

Hargreaves Lansdown doubles charges for some investors

On the 15th January Hargreaves Lansdown (HL) announced new charges on its investment platform, which is one of the most widely used by private investors. The changes are no doubt provoked by the new rules whereby funds can no longer pass part of their charges back to HL, as a result of the RDR (Retail Distribution Review). But the changes will mean that the annual fees paid to HL by some investors will double. ShareSoc has issued a press release explaining ...

Fiduciary Duty Consultation – no major changes proposed

The Law Commission is running a public consultation on the "Fiduciary Duties of Investment Intermediaries". This was prompted by a recommendation in the Kay Review that examined the issue of "short-termism" in business and investment decisions. It suggested that this area should be examined. One question posed was whether the legal concept of "fiduciary duty" should be extended so that investment intermediaries had clearer moral responsibilities to their clients.For example, trustees of pension funds have a general legal obligation to act ...

Whitewash at British Smaller Companies VCT

British Smaller Companies VCT has called a General Meeting to approve resolutions to rectify past accounting errors that resulted in technically illegal payments of dividends and share buy-backs back in 2006-2008. In essence the company did not have the reserves required. So these "whitewash" resolutions as they are called ask shareholders to waive any claims against the directors for these errors, and claims against shareholders who received the dividends when they should not have. This follows similar whitewash resolutions that were ...

Collective Engagement – a new “City Club” for institutions?

The Kay Review advocated the setting up of a mechanism whereby institutional investors could engage better with public companies. This was seen as a way to improve understanding between investors and companies, to encourage more long-term thinking, to enable debate on strategic options and to tackle such problems as excessive pay.A first step has been the setting up of a "Collective Engagement Working Group" under the Chairmanship of James Anderson of Baillie Gifford. It has produced a report on how such ...

Pan African Resources AGM Report – a minor victory for shareholders on buy-backs

Pan African Resources is a South African gold mining company, but they are registered in the UK and hence hold their AGMs in London. This year it was at 10.00 am on the 22nd November in the City of London despite shareholders complaining about the 10.00 am start time last year. A full report is here, but here are some of the noteworthy points. Only the Chairman Keith Spencer was present from the directors, and he said the main reason for absence ...

Why should investors not see performance fee details at Northern VCT?

Northern Venture Trust (a VCT) introduced a management performance fee at a General Meeting on the 18th July. They did not have one before even though they had outperformed the very similar Northern 2 VCT over the last ten years who do. I spoke against the introduction of such a fee at the General Meeting, and raised questions about how the fees were to be calculated, as did another shareholder. The calculations were not at all clear from the meeting notice. As ...

London Investor Show Olympia

ShareSoc exhibited at the London Investor Show at Olympia on the 25th October. It proved to be a good show in terms of attracting new members and meeting existing ones even though there is substantial effort in organising and manning a stand. A photograph of the stand is shown to the right - Member Steve Holdsworth assisting at front, Director Chris Spencer-Phillips talking to a visitor. Incidentally the posters we used on the stand were printed by Printed.com – a division of ...

City of London Investment Group (CLIG) – a confusing AGM today

City of London Investment Group (CLIG)  – a confusing AGM today I’ll try to tell you briefly “the way it was” to paraphrase the CEOs introduction to his section of the Annual Report. A full report is available here. Barry Olliff is the CEO and this company has succession problems just like Carpetright which was covered in my last blog post. Likewise, they are back at square one after losing a new CEO appointed at the end of 2012, but who departed with ...