Regulations and Law

Chinese AIM Companies – Sorbic et al

A good letter in the Financial Times today (29/5/2015) from Sorbic investor John Gunn about how AIM rules have failed to protect shareholders. He said it is "a terrible state of affairs" and suggested the AIM regulations had failed completely to protect shareholders. Sorbic International (SORB) is an AIM listed Chinese company which has encountered major governance and legal problems and its shares have been suspended. To quote from the latest RNS, after the board fired Mr Wang Yan Ting, the CEO: "Since ...

Custodian Reit – It always pays to ask

A note from Mark Bentley: I have been a shareholder in the Custodian REIT (AIM:CREI) since its original flotation in March 2014. It has “done what it says on the tin”, investing in numerous small sized, high yielding commercial properties, to generate income, resulting in an attractive and growing dividend stream for investors. Given the low level of target gearing (25% of NAV), this is a low-risk strategy I find attractive, in this era of negligible interest rates. In January 2015 the ...

A Dream Become a Nightmare – And a Plug for ShareSoc

There was a good article in the Daily Telegraph on Sunday (17/5/2015) explaining how Thatcher's dream of a share owning population has become a nightmare. She tried to create a nation of investors by privatisations and regulatory changes to improve business competition but instead many companies have ended up being sold to foreign buyers. Even worse there has been a collapse in private share ownership. The reported proportion of UK shares held by individuals has collapsed from 20% in 1994 to 11% ...

Why Share Certificates are Dangerous and We Need a New System

The national press have covered the story of Deryn and Derek Hemment who face a demand for £25,000 from Capita to replace lost share certificates. They held shares in Compass Group worth £1.5 million and Capita posted them new certificates via second class post. But they never arrived and cannot be traced. Capita says it's not their problem because their terms and conditions make it clear that certificates are sent at the recipients risk. Capita appear to have been acting as ...

Governance in Investment Trusts – Alliance Trust, Baronsmead VCT 3 and the Core VCTs

The battle for the soul of Alliance Trust continues - or so their Chairman would have it. But even institutional proxy advisors ISS and PIRC have now come out in support of Elliott Advisors and their resolutions to appoint three new directors at the AGM on the 29th April. Alliance have said they are looking for a new truly independent non-executive director, but will they be anyone who is likely to disagree with the existing board or take a contrary view? ...

Changes to Pre-Emption Rights Principles

The FCA have issued a note from the Pre-Emption Group giving some revised "principles" to be followed by public companies. As the note says "Pre-emption rights are a cornerstone of UK company law and provide shareholders with protection against dilution of their investments".  In general UK companies cannot issue more shares without the approval of shareholders, which is why on most Annual General Meeting agendas you see two linked resolutions that permit allotment of new shares and a partial disapplication of ...

FCA Criticised in Parliament

The Financial Conduct Authority (FCA) has been severely criticised today (27/3/2015) in a report issued by the Treasury Select Committee. Here are a few things they say in their overall conclusions about the events surrounding the press briefing on the Government's planned review of the life insurance market, which caused share prices in some companies to drop sharply. "The events of 27 and 28 March.....revealed multiple flaws in the FCA's processes and practices. These failings went right to the top of the ...

Moneysupermarket.com Results and Parliamentary Criticism

It was interesting to listen to the Preliminary Results on-line conference call of Moneysupermarket.com this morning.  The results were positive and better than analysts' forecasts but the interesting bit came in the question/answer session. Top marks though to the company for making the call freely available. Revenue of the company rose 10% and adjusted earnings per share were up 14%. The dividend was also raised by 10%. The company also noted that trading was strong in the first two months of this ...

ShareSoc Launches Share Ownership Reform Proposals

ShareSoc has just issued the following press release: ShareSoc Launches Share Ownership Reform Proposals ShareSoc has been campaigning for more rights for shareholders and we have now launched specific proposals on how we believe share trading should be reformed. In particular our proposals are aimed at tackling the loss of voting and other rights that currently arises from the use of stockbroker nominee accounts. Our suggestions include: The development of a new low cost electronic trading facility as recommended by the Kay Review, and ...

Market Abuse – ESMA advises EU Commission on new regime

Market abuse is an allegation that regularly comes up associated with certain companies - frequently those listed on AIM. There has been an EU Directive on market abuse for some years, which laid down what EU countries should legislate against via suitable regulations. In the UK that framework was actually extended somewhat and you can see the current UK regulations under the "Code of Market Conduct (MAR1)" handbook - see http://www.fshandbook.info/FS/html/FCA/MAR/1. You just need to look at the headings of the chapters ...

Corporate Governance at Quindell, and news on Aero Inventory

I won't even attempt to discuss the past history of events at Quindell in this article. But recent ones suggest that it is likely to remain a controversial company. After the departure of founder and former Executive Chairman Rob Terry, Richard Rose has been appointed as Chairman and Jim Sutcliffe has been appointed as Deputy Chairman and Strategy Director. Shareholders no doubt welcomed these experienced hands to take charge of this company after past events. But there are a couple of problems ...

Forex trading and the Swiss Franc

The abrupt change of policy by Swiss authorities to relax the limit on the value of the Swiss Franc against the Euro has caused substantial chaos in foreign currency markets. Alpari, one of the leading forex trading platforms in the UK, has gone into administration and others such as Saxo Bank admitted they would incur losses as a result. In the case of UK listed company IG Group it had some impact on their share price and they had to say ...