Corporate Governance

Corporate Governance News

This section on Corporate Governance provides investors with the latest topical news plus some informal comments and insights from ShareSoc’s directors and other contributors.

Fiduciary Duty and Intermediated Securities Report – A Bombshell at the End

The Law Commission was asked to undertake a review of how the law of fiduciary duties applies to investment intermediaries and to evaluate whether the law works in the interests of end investors. This followed a recommendation in the Kay Review undertaken by Professor John Kay where he attacked the excessive "intermediation" in financial markets, the lack of clarity of responsibility, the difficulties trustees have in interpreting their duties and related factors that seemed to be undermining the ethics of financial ...

Surprises on Remuneration at the Kentz AGM, and opposition also at Hiscox

Surprises on Remuneration at the Kentz AGM,  and opposition also at Hiscox Last week (on Friday the 16th May), both the Remuneration Policy and Remuneration Report resolutions were voted down by shareholders at the Kentz Annual General Meeting. This is one of the few companies where such resolutions have been lost in the current AGM round and the first where the Remuneration Policy vote has been defeated. That vote was only introduced in the last year by new Government legislation, but oddly ...

Barclays wins vote on pay

Barclays Bank Annual General Meeting yesterday showed how difficult it is to get excessive pay awards voted down. Despite strong opposition from PIRC, F&C and Standard Life (the latter actually spoke at the meeting which is unusual for institutions), only 24% of votes were cast against the Remuneration Report with an even lower number against the Remuneration Policy. There were a number of shareholders who abstained so the media commonly reported 34% of shareholders  as failing to support the board, but ...

Changes to Company Regulations

Today on Bank Holiday Easter Monday, the Government announced some changes to company regulations. Does this show how they work all the days of the year to improve the UK business environment, or they thought it a good time to announce controversial proposals? You can judge for yourselves the answer to that question after reading what follows. But as most of the proposals were well flagged in advance by past public consultations, they may only be controversial to those companies who ...

Directors’ Share Purchases at Chrysalis VCT

Would you be happy if you saw that the directors of a listed company had apparently purchased shares at an advantageous price? In other words had purchased shares in the market  at a price that was not available to anyone else? On Thursday the 17th April, I chose to purchase 3,000 shares in Chrysalis VCT. This followed an announcement by the company on the 14th April that the company had achieved two successful exits from portfolio companies which had increased the company's ...

Oxford Technology VCTs and Baronsmead VCT 3

ShareSoc has organised a meeting for those investors in the two Oxford Technology VCTs who are affected by the withdrawal of VCT status. It is scheduled for the 20th May in the City of London. Although the companies have submitted an appeal letter to HMRC, there is some doubt as to whether the appeal will be successful. See this web page for more details of the issues, and how to register for the meeting if you wish to attend:  www.sharesoc.org/campaigns/oxford-technology-vcts/. The ...

Insurance companies and Kentz

With the attack by the Government on annuities in the budget and the revelation that the FCA is to look into the treatment of some policyholders such as those in "closed" funds, both investors in these companies and their directors must be somewhat incensed. Indeed the Financial Times reported this morning that half a dozen of the City's top institutional investors have consulted a leading law firm over alleged "market abuse" in the way the latter review was disclosed. It seems ...

Remuneration Policies and Baronsmead VCT 3

The new Enterprise Regulatory Reform Act requires public companies to take a vote on Remuneration Policy, i.e. a forwarded looking binding vote for the next three years, as opposed to the non-binding retrospective one on the Remuneration Report with which we are all familiar. The latter will still be present, and investors might worry that the former will be a long-winded and tedious document that they will need to plough through (rather like the multi-page Remuneration Reports from large companies). There have ...

Essar Energy and Camkids – spot the connection

Essar Energy (ESSR) is a FTSE-250 Indian oil company where minority shareholders are none too happy about a proposal from the majority owners (the Ruia family) to make a bid for the company at 70p. It floated at 420p in 2010 on the London Stock Exchange and joined the FTSE-100, but it has shown substantial losses in the last two years. Standard Life has described the move as "cynical opportunism" and seem to believe that the offer undervalues the future prospects ...

Barclays – Who benefits?

Barclays Bank announced their final results yesterday. The results did not match expectations and the shares fell 4% on the day. The national media led with the story that the company had still increased the bonus pool even so, and that the company now pays out more in bonuses than it pays in dividends to shareholders. The CEO, Antony Jenkins,  gave the usual excuse for the high pay levels - that they need to compete on the international scene for top class ...