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.

Dividends – ShareSoc and UKSA send joint letter to FRC, FCA and BEIS

Many of our members are very concerned at the spate of recent dividend suspensions. Many members feel that private investors are much more concerned with the non payment of dividends than the problems at AGMs, about which we have blogged at length. Many members are somewhat surprised that ShareSoc have not pronounced on dividends, so it is timely to correct this.

Not only are many private investors heavily dependent on dividends, so are many charities and pension funds. These points are very well made in the article ShareSoc Patron Lord Lee wrote for FTMoney on dividends this weekend:

https://www.ft.com/content/69ccb860-4e05-4764-9a4d-295d8e4a19fc Private investors hit by dividend drought

We fully accept that some dividend suspensions are entirely justified. However, a number of companies making dividend decisions are not following the recommendations in the FRC infographic and are failing to explain properly their decisions in the information they give out in their AGM circulars and elsewhere.

We have today written to the FRC, FCA and BEIS making the points above and asking that they urgently look at the dividend issues and consider giving further guidance on this.

Cliff Weight, Director, ShareSoc

5 Comments
  1. AG 27th April 2020 at 2:32 pm

    This being t’internet, might it not be possible to add the content of the letter to this blog posting (or put a link to it?)

    Also, the FT article is paywalled, but it might be possible to find the article via Google

    https://www.google.co.uk/search?q=site%3Aft.com+Private+investors+hit+by+dividend+drought&oq=site%3Aft.com+Private+investors+hit+by+dividend+drought

    • Cliff Weight 28th April 2020 at 9:25 am

      The main points of the letter sent were in the article.

  2. Tony Prynne 8th May 2020 at 10:41 pm

    Not a very helpful response to AG’s question, Cliff. So let me ask, why are you reluctant to allow members to see the letter? And why publish this in a Blog, where I suggest it will get minimal viewing. Letters sent to official bodies implicitly purporting to be on behalf of members should be given greater prominence in the News section or a more appropriate place.

    I disagree with the views you have expressed. Most companies should be cancelling, or at least postponing dividends for the simple reason that in the present environment very few have any near- future earnings visibility, It is the prudent and responsible thing to do in the interests of all stakeholders. A few weeks ago we witnessed easyJet shamefully bleating about how it needs state funds on the very same day that it paid £170m dividend. Most companies are benefiting from state assistance at present, even if it is just the deferral of VAT payments. There should be no state assistance to any companies that are paying dividends, in my opinion. How do I explain to a young relative that has just lost his job, with no state help whatsoever, except for Universal Credit; with a bleak prospect for finding another, and the prospect that he will lose his home when the rent holiday ends, that we will all benefit from massive government subsidies to industry so that they can pay wealthy shareholders dividends, and the company management fat salaries. Perhaps you could give me some suggestions, Cliff. If shareholders need the cash, they can always sell some shares.

  3. Cliff Weight 10th May 2020 at 6:56 pm

    Tony, Here is the letter, see below. I think the Blog is well read. The letter will get mentioned in the monthly newsletter too, which will also contain a number of articles about dividends.

    Please remember that if any member wants to write an article and submit it we will publish it (so long as it is not libellous and is interesting). Not everyone seems comments on a blog, so you might wish too write your comments above as a blog/article and we can publish it. Feel free to expand your comments if you wish. best regards, Cliff

    27 April 2020

    To:
    Chris Thresh, BEIS
    Jen Sisson, FRC
    Henry Postlethwaite, FCA

    Dividends – A joint letter on behalf of Private Investors from ShareSoc and UKSA

    Further to our letter of 26 April re AGMs, we wish to add that we and many of our members are very concerned at the spate of recent dividend suspensions. Not only are many private investors heavily dependent on dividends, so are many charities and pension funds. These points are very well made in the article ShareSoc Patron Lord Lee wrote for FTMoney on dividends this weekend:

    https://www.ft.com/content/69ccb860-4e05-4764-9a4d-295d8e4a19fc Private investors hit by dividend drought

    We fully accept that some dividend suspensions are entirely justified. However, a number of companies making dividend decisions are not following the recommendations in the FRC infographic and are failing to explain properly their decisions in the information they give out in their AGM circulars and elsewhere.

    We ask that you urgently look at the dividend issues and consider giving further guidance on this.

    These dividend issues are relevant to our letter of 26 April. If AGMs were functioning properly and if companies were communicating clearly in line with the FRC infographic, we would be much happier.

    Please feel free to forward this letter to your colleagues.

    We would be pleased to meet with you (by video conference call) to discuss these proposals and to explain our ideas in further detail, together with our supporting rationale.

    Yours sincerely,

    Cliff Weight Peter Parry
    Director Policy Director
    ShareSoc UKSA

    Copy Lord Lee of Trafford

  4. Mark Northway 11th May 2020 at 6:01 am

    27 April 2020

    To:
    Chris Thresh, BEIS
    Jen Sisson, FRC
    Henry Postlethwaite, FCA

    Dividends – A joint letter on behalf of Private Investors from ShareSoc and UKSA

    Further to our letter of 26 April re AGMs, we wish to add that we and many of our members are very concerned at the spate of recent dividend suspensions. Not only are many private investors heavily dependent on dividends, so are many charities and pension funds. These points are very well made in the article ShareSoc Patron Lord Lee wrote for FTMoney on dividends this weekend:

    https://www.ft.com/content/69ccb860-4e05-4764-9a4d-295d8e4a19fc Private investors hit by dividend drought

    We fully accept that some dividend suspensions are entirely justified. However, a number of companies making dividend decisions are not following the recommendations in the FRC infographic and are failing to explain properly their decisions in the information they give out in their AGM circulars and elsewhere.

    We ask that you urgently look at the dividend issues and consider giving further guidance on this.

    These dividend issues are relevant to our letter of 26 April. If AGMs were functioning properly and if companies were communicating clearly in line with the FRC infographic, we would be much happier.

    Please feel free to forward this letter to your colleagues.

    We would be pleased to meet with you (by video conference call) to discuss these proposals and to explain our ideas in further detail, together with our supporting rationale.

    Yours sincerely,

    Cliff Weight Peter Parry
    Director Policy Director
    ShareSoc UKSA

    Copy Lord Lee of Trafford

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