This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

New Year Resolutions? How About a New Resolution at RBS?

One of ShareSoc’s recent initiatives has been the promotion of the concept of Shareholder Committees as a way of improving corporate governance in public companies. To pursue this agenda we have today submitted a requisition for a resolution to be added to the Annual General Meeting of the Royal Bank of Scotland (RBS). A summary of what it said is given below (the full press release is here: ):

RBS Shareholders Demand Shareholder Committee

(A joint press release on behalf of Private Investors from ShareSoc and UKSA)

Over 100 shareholders in the Royal Bank of Scotland (RBS), supported and coordinated by ShareSoc and UKSA, have requisitioned a resolution to install a new “Shareholder Committee” at the company which will include shareholder representatives so as to improve the corporate governance at the bank.

Why are ShareSoc and UKSA doing this?

Mark Northway, ShareSoc Chairman, said: “One objective is to stop the events that took place at RBS from ever happening again! A dominant CEO; concealing the true financial position of the company from investors; proceeding with a reckless acquisition; and then publishing a rights prospectus which concealed the problems faced by the company. These are not examples of good governance. Shareholders, including individuals, deserve a new approach; one with greater involvement and more effective input from them as ultimate owners.”

ShareSoc suggests that this initiative will significantly benefit corporate governance at RBS, and represents a valuable opportunity for RBS to lead the way in exploring a concept which works well in other countries, which is under consideration by the UK Government, and which could have broad application in addressing the current breakdown in the agency model in UK public companies.

This proposal is in the public interest. There is evidence of a continuing breakdown in the corporate governance of UK public listed companies, as is underlined in the Government Green Paper published in November. RBS is an important asset and its ownership and the way it is governed is of interest to the wider public. There is a need for companies to step up and respond to Mrs May’s initiative to make capitalism work for everyone.

John Hunter, Chairman of UKSA, commented: “Most large shareholders are intermediaries who tend to act in their own interests and not those of the ultimate beneficial owners (i.e. the people they represent). This needs to change and this proposal is a step towards that. Transparency and formal engagement will help to prevent poor stewardship.”

Retail investors are beneficial owners of at least 12% of the UK stock market, and indirectly a much larger percentage through pension and investment funds. They have an independent long-term perspective, are generally unencumbered by conflicts of interests and by the time pressures that institutional shareholders might have. A member of the proposed committee representing retail shareholders might be jointly proposed by the two nationally recognised shareholder associations of ShareSoc and UKSA.

We hope RBS shareholders will support this initiative and vote for the resolution at the AGM in May. To register your interest in this campaign and receive further information as it arises, please go to this web page:

Roger Lawson

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