Over 20 members have to my knowledge written to their MPs (as we requested) and a number of members have asked questions at AGMs. We have certainly raised the issue.
The Minister (or most likely his civil servants) have produced what looks like a standard response which is being sent to those MPs who contacted Greg Clarke MP, the Secretary of State. Their response argues that the UK does not have to follow the intent of the EU Shareholder Rights Directive and can continue to have the nominee as the shareholder in UK Company Law.
Some companies appear to have referred our AGM questions to their registrars and have written back to our members with statements along the lines of
“However, it appears that a major change would be required in how shareholdings are recorded to effect this which may have legal and regulatory implications and therefore it is not possible at this time to confirm our support [to our suggestion that the name of the end investor and email address is shown on the shareholder register] without understanding any proposals to achieve this.” This was from Tate and Lyle.
“Initial discussions with our registrar, Equiniti, confirmed that there are a large number of considerations which would need to be resolved before having nominee-held shareholdings recorded on the company’s share register, including the complications of the legal relationships between the company, registered nominee holder and the underlying shareholders. In addition, flagged challenges and risks include for example, ensuring email addresses remain current, and ensuring accounts are not susceptible to fraud. In short it is not straightforward.… Understanding the finer detail and the associated implications is key before we are in a position to confirm our support.” This was from Burberry.
This is a classic defensive strategy when someone does not want to seriously engage with a new idea. They note that “shareholder rights are important to us”, but then come out with a list of lame excuses which they say are not their responsibility. And they say it is complex – or not straightforward – and that they cannot give support until they know the detailed proposal.
I think we have got them rattled! There have been a number of good articles in the press which are supportive of our aims. The politicians are in danger of being out of step with the general population who elect them. Here are 3 recent articles:
https://www.thetimes.co.uk/article/shareholders-are-denied-a-voice-nc9tlngzm
https://www.ft.com/content/929f66b8-7fa4-11e8-8e67-1e1a0846c475
Open Letter
The next step in our plan is an open letter which we would like might FTSE Chairman and other key opinion formers to sign and show their support for the broad principles we wish to be recognised. The current draft begins:
We the undersigned:
- Support shareholder democracy
- Want all shareholders to vote
- Want all shareholders to be treated equally
- Recognise that the end investor is in many cases not the nominee.
The draft letter makes a number of other points including:
- It is estimated that currently only 6% of individual shareholders’ shares are voted. Amongst the reasons for this are the difficulties of shareholders obtaining information and voting forms.
- Some nominees choose not to pass on information about AGMs, annual reports, etc to the end investor. Nominees are not required, by law, to pass on such information and many nominees argue that the service they provide keeps the costs down and meets the needs of their clients.
- Many nominees fail to promote their services such as voting, proxy letters to attend AGMs as corporate representatives of the nominee (in respect of the shares held by the end investor), notice of publication of annual reports and AGM information; and some charge extra for such services. Nominees’ voting services are difficult and time consuming for individual investors to use.
Platform Providers
Another step in our plan is to talk to platform providers and encourage them to provide better services to their customers. What is needed is a neat, slick service that makes it very easy for individual investors to vote as a collective and hence empowers them by aggregating individuals votes together.
People ask me what else they can do?
If you are attending any AGMs then please do ask the question we have suggested, see https://www.sharesoc.org/sharesoc-news/protect-your-rights-act-now/
The suggested question is as follows:
Question for the AGM
Please can you tell me what percentage of your shares are held by individual investors?
And do you know what percentage of these individuals have voted at this AGM by proxy?
Can you tell me what percentage of your individual shareholders do not get to see your annual report, and do not get notification of the AGM or voting forms?
Will you support me and ShareSoc, the UK Individual Shareholders Society, in lobbying the UK government to put the end investor’s name and email address on the shareholder register, so that you can more easily communicate with your shareholders?
The EU Shareholder Rights Directive has a clear intent that the end investor should be identified on the shareholder register and not just the Nominee. Will you lobby the UK government to implement the clear intent of the EU Shareholder Rights Directive and hence protect the rights of Individual Shareholders?
To achieve maximum effect, email the company secretary before the AGM with a copy of your question. This will ensure they prepare a considered response at the AGM. Please copy your email to info@sharesoc.org where we will keep a register of companies questioned.
And if you have not yet written to your MP, then please do so now. It is not too late and the larger the number of letters written the more the message will get through and the greater our chances of success.
Cliff Weight, 16 August 2018
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