Regulations and Law

Asset Management Market Study

I commented previously on the FCA's Asset Management Market Study, which suggested there was weak competition in this market. Needless to say, most asset managers do not seem to agree. ShareSoc has now submitted a response to the questions raised in that document which you can read here: Asset-Management-Market-Study-Response-2017-02-21. In summary, we agree with the general conclusions and support regulatory intervention where necessary. We also note that although the study does not address the issue directly of financial education, it is our view ...

FCA Reviews Open Ended Funds with Illiquid Assets

The Financial Conduct Authority (FCA) is reviewing open ended funds that invest in such illiquid assets as property and infrastructure. It also potentially affects investments in private equity, unlisted securities and special purpose vehicles. If you recall, only a few months ago a number of property funds had to close to redemptions, i.e. investors could not get their money back, simply because of a minor panic over the impact of the Brexit Referendum vote. Although such funds do keep a cash ...

High Court Rejects Dee Valley Takeover Challenge

Small water company Dee Valley has been the subject of a bid from Severn Trent Water via a scheme of arrangement. An attempt to block it by those opposed acquiring a block of shares and then distributing them to many supporters (mainly employees we understand) has been rejected by the High Court. In the case of a scheme of arrangement, more than 50% in number of the shareholders have to support the offer, as well as 75% of shareholders by value. In ...

Obtaining Information on Frauds

One of the things that investors find frustrating is the failure of the regulatory authorities (FCA, SFO, the Police, LSE) to obtain information on the progress or results of investigations into the affairs of companies. For example, if a company and its shareholders are the clear victims of a fraud, often involving false accounting such as in Globo not so long ago and at BT only recently, then obtaining information about the matter is exceedingly difficult. If the company goes into Administration, ...

FCA’s Mission Statement – A Suggestion

The Financial Conduct Authority (FCA) has been consulting on its "Future Mission" and ShareSoc has submitted a detailed response. It can be read here: https://www.sharesoc.org/FCA-Mission-ShareSoc-Response.pdf and there is also a press release which we issued this morning which summarises it: https://www.sharesoc.org/pr86-fca-mission.html It's a pretty devastating critique of the activities of the FCA and the muddled thoughts about its mission statement. It has occurred to me that actually writing a mission statement for the FCA should not be that difficult, so here's my ...

Forward Selling: A Crime Against Shareholders?

Roger has recently written about the censure of Cornhill Capital, in the matter of New World Oil & Gas. The full censure notice, setting out the gory details of the case has been published here: http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2017/n0117.pdf This case centres around the practice of "forward selling", a practice which is not unusual at present. So, what is forward selling? Forward selling occurs when a company agrees to issue shares to a third party and that third party sells those shares in the market, prior ...

Cornhill Capital Fined Over AIM Placing

Cornhill Capital have been fined £210,000 by the London Stock Exchange (LSE) over a placing of shares in New World Oil & Gas on AIM. Cornhill was acting as a broker to the company which planned to place some 2 billion shares. That was twice the number already in issue. Cornhill sold shares to its private clients in advance of the placing with the sales to be fulfilled from the placed shares. But the placing required a vote of shareholders and ...

Rolls-Royce Bribery Settlement – Questions Worth Asking

On the 17th January aero-engine maker Rolls-Royce announced a settlement with the Serious Fraud Office (SFO), US Department of Justice (DoJ) and Brazilian authorities over past bribery and corruption...

Losses From Withholding Taxes on Dividends

An issue that has come to the notice of ShareSoc is the problem of the Withholding Tax introduced on dividends in South Africa. Even though Pan African Resources Plc (PAF) is registered in the UK, it is dual listed on AIM and the Johannesburg Exchange (JSE). Because of the way South Africa introduced the tax change, any shareholder is going to get 15% deducted before payment (or 10% for UK residents under a dual tax treaty). To get the lower rate, you ...

Stamp Duty Review

The Office of Tax Simplification is currently undertaking a review of Stamp Duty. Stamp Duty is paid on share transactions, although there are numerous exceptions and ways to avoid paying it. Although this review seems to be primarily focussed on technical aspects and how to remove paper processes (still needed for off-market transfers for example), ShareSoc argues that the tax should be scrapped altogether. (more…)

Shareholder Rights Directive Agreed – But It’s Still Defective

There has been agreement within the EU on the final form of the Shareholder Rights Directive. What follows is the press release issued by Better Finance (a body that represents individual investors across the EU and of which ShareSoc is a Member). PRESS RELEASE PRESIDENCY AND PARLIAMENT AGREE ON REVIEW OF SHAREHOLDERS RIGHTS DIRECTIVE: LIMITED IMPROVEMENTS FOR SHAREHOLDERS 14 December 2016 - On 9 December 2016 the EU presidency and the EU Parliament agreed on the final version of the new Shareholders ...