Regulations and Law

A YouTube video on shareholder rights

The latest initiative in the ShareSoc campaign to improve shareholder rights is a video. In it I explain why shareholder democracy is important and how it has been totally undermined by the nominee system now in general use. Instead of you acquiring the rights of an owner of the business when you buy shares, those rights have been diverted and purloined by the nominee operator or stockbroker. This is simply wrong! That is why ShareSoc has been campaigning for change under the ...

Auditor Regulation and the dozy watchdogs

The Government has published a public consultation on Auditor Regulation. This is a discussion document in response to the requirements of a new European Directive on Audit, and your responses are invited. It's available here: https://www.gov.uk/government/consultations/auditor-regulation-effects-of-the-eu-and-wider-reforms although those who do not have a professional interest in the subject may find it heavy going. But it's worth repeating the first paragraph which is: "Effective financial reporting underpins the development of the best businesses - those that others are willing to invest in and ...

Better Finance comments on the EU Shareholder Rights Directive

Better Finance, a representative body for European shareholder associations, has issued a press release commenting on the review of the Shareholder Rights Directive. It points out a number of defects in the proposals. Here are extracts from the press release: "Guillaume Prache, managing director of Better Finance has stressed that many individual shareholders of EU companies will still have to pay high fees to exercise their voting rights across borders within the EU. If the internal market for capital is to carry ...

AIM delistings – Security Research and Rethink

Delistings of AIM companies always distress investors. Out of the blue your shares in a company can drop in value very substantially, and you can be left holding an unsaleable stock. Two recent announcements of delistings have been Security Research (SRG) and Rethink (RTG). These are both companies with patchy trading histories and low market capitalisations (£9m and £5m respectively after the announcements). It requires a vote of 75% of shareholders to approve delisting. In the case of Security Research the General ...

Tesco Legal Action – or should we just “put our hands up”?

Law firm Stewarts Law has announced that it is preparing a case against Tesco based on the losses of investors in the company from the overstatement of profits. To quote from their announcement: "The Claim will allege that directors and senior management knew or were reckless as to whether Tesco's statements to the market were untrue or misleading and/or dishonestly concealed the true position, in breach of the Financial Services and Markets Act". They don't intend to await the results of ...

Optimal Payments, Quindell and equity loans

A major controversy has arisen over the use by directors of loans from companies such as Equities First Holdings (EFH) which are secured against their equity stakes. The latest company to be affected is Optimal Payments (OPAY) who presented at a recent ShareSoc seminar. The share price fell substantially after comments from a well known blogger, and declined as much as 22% on the 14th November after the comments were widely circulated on bulletin boards. A number of other public company directors ...

Progress on the Kay Review

Back in 2011 the Government commissioned Prof. John Kay to review the operation of UK stock markets. There were concerns about "short-termism" by investors, poor corporate governance in companies, excessive executive pay, lack of engagement by investors with companies, high investment charges and excessive intermediation in the investment chain. The resulting report was a very good analysis of the defects in the way the market operated and the recommendations in the report for change were generally accepted by the Government. The Government ...

Why should nominee operators have rights?

Following a meeting at the BIS Department where I discussed the issues associated with Part 9 of the Companies Act, and our suggestion that all shareholders (including those in nominee accounts) be on the share register of companies, I had some further thoughts on this subject. On reflection it seems very odd to me that nominee operators (i.e. your stockbroker) have the rights endowed by the Companies Act on shareholders. Investors in nominee accounts have no such rights (voting rights, information rights, ...

Shareholder rights – the way forward

The Investors Chronicle published a five page article on Friday (7/11/2014) on the campaign for improved shareholder rights under the title "Take Control". The writer Julia Bradshaw gave a good overview of the position of voting and information rights in the UK in comparison with other countries - yes we are way behind most of them - and the activities of representative shareholder associations. The legal risks of holding shares in nominee accounts and why anyone who understands the intricacies of ...

Shareholder Rights campaign launched

Last week ShareSoc launched a campaign to improve shareholder rights with a meeting in London. It focussed on the problems associated with nominee accounts and the adopted legal requirement to replace paper share certificates with an electronic system in a few years time. There was an impressive line-up of speakers at the meeting which included John Kay (author of the Kay Review and FT writer), Michael Kempe from Capita representing the ICSA Registrars Group, Peter Swabey from ICSA, John Lee (Lord Lee ...

Sainsbury and Tesco (do they need a pressure group?)

Following on from the debacle at Tesco, Sainsbury produced some quite awful trading figures yesterday (1/10/2014). Here's a review of some of the news on those and other retailers. Tesco The Financial Conduct Authority (FCA) are undertaking an investigation into Tesco's "overstatement of expected profit". Making misleading statements to the market is potentially a criminal offence. How long that will take to reach any conclusions is anyone's guess. The result of such investigations are often reported to investors so late in the day ...

Barclays, Tesco and MoPowered

Barclays, Tesco and MoPowered - two big companies and one a typical new AIM company which has yet to show it can make a profit - but all three are under the weather in the last couple of days. Barclays have today (23/9/2014) been fined £38m by the Financial Conduct Authority for failing to ensure that clients money in the investment bank was kept separate from the banks own assets. When I joked in my local Barclays Bank this morning that I ...