Regulations and Law

Placings and Open Offers and How to Do Them – St Ives and Tritax

One of the things that annoys private investors is when a company does a placing of shares. This can be for a number of reasons such as the company needing funds for an acquisition, or simply because the company is fast running out of cash and wishes to stave off financial distress. Because of the EU mandated Prospectus Directive, a full Rights Issue where all shareholders can participate in the share issuance and hence avoid dilution of their stake, does require an ...
Post Date: January 30, 2016 Read more

UK Share Ownership Structure – Not Fit for Purpose

The Editor of Investors Chronicle commented on the recently published BIS Paper on the structure of UK share ownership in this week's edition (see the last article on our blog for more background). He had this to say: "The Department [BIS] finally seems to be coming around to the view that it is, quite simply, not fit for purpose - a view we have held for some time and which I am regularly encouraged by readers to push further. So well ...
Post Date: January 25, 2016 Read more

BIS Release Paper Showing the Mind-Boggling Complexity of the Intermediated Shareholding Model

The Government BIS Department have released a Research Paper entitled "Exploring the Intermediated Shareholding Model". It shows in 160 odd pages the existing share registration models in the UK and the underlying systems that support shareholder rights (including voting). In essence it demonstrates perfectly the need for reform. It shows that private investors often do not know what rights they have in nominee accounts or indeed that there are alternative ways of holding shares. Even if they are aware they should have ...
Post Date: January 19, 2016 Read more

Stockbroker Transfers – More Evidence of Unreasonable Delays

Back in November I wrote about the delays that can occur in switching a portfolio of shares from one stockbroker to another. I now have a file of 7 examples contributed by different people where such transfers took several months. This is surely totally unreasonable and unnecessary. On behalf of ShareSoc and our members I have written to the Financial Conduct Authority (FCA) complaining about this problem and have received a response which provides some more information at least. The FCA does have ...
Post Date: January 12, 2016 Read more

The Audit of HBOS

One of the mysteries not adequately researched in the recently report into the demise of HBOS was the failure to examine the audits of the company that took place. The Financial Reporting Council (FRC) decided two years ago not to look into the audits of the bank by KPMG prior to its collapse and acquisition by Lloyds in 2008. But the Parliamentary Treasury Select Committee has now been looking into this further. Andrew Tyrie, the Committee Chairman, has already suggested the FRC ...
Post Date: December 27, 2015 Read more

New VCT Rules and Knowledge Intensive Businesses

I attended the Annual General Meeting of Northern Venture Trust (NVT) yesterday - one of the more successful VCTs. Management representative Tim Levett gave us a briefing on the impact of the new "draconian rules" (as he called them) for VCTs arising from EU regulations. His criticism also arose from the fact that the legislation is effectively retrospective as it impacts both "old money" from past fund raisings and new money. One particular oddity is that the amount of money than can ...
Post Date: December 18, 2015 Read more

When Brokers Go Bust

"When Brokers Go Bust" was the title of a fascinating article in Investors Chronicle on 11/12/2015. It covered the impact on investors when their stockbroker goes out of business. That's pretty uncommon you might think. But it revealed the surprising fact that in the last five years alone more than 400 investment firms have gone belly up, based on data from the Financial Services Compensation Scheme (FSCS). It spelled out two particular problems: 1) the difficulty in untangling pooled nominee accounts (which ...
Post Date: December 15, 2015 Read more

A Warning – 1875 Finance

Several ShareSoc directors have been called recently by someone claiming to represent "1875 Finance". To prove their bona-fides they even quote your own log-in information for a well known financial web site - yes they will even tell you the password which to any sensible person should immediately arise suspicion. 1875 Finance is an financial organisation based in Geneva, Switzerland. But they are not registered with the FCA to do business in the UK and have no connection with the aforementioned financial ...
Post Date: December 8, 2015 Read more

EU Commission Proposes Overhaul of Prospectus Rules

The EU Commission has published proposals to overhaul the rules on prospectuses, where companies are raising equity or debt in public markets. But prospectuses are costly to produce, especially for smaller companies.  As Ian Sayers of the AIC said after the above announcement: "One of the main problems with a prospectus is that the regime effectively compels issuers to include any information that an investor might conceivably want. Given the legal implications, the result is a huge amount of boilerplate of ...
Post Date: December 6, 2015 Read more

LAPFF Write to FTSE-350 Companies on their Duties

The Local Authority Pension Fund Forum (LAPFF) have issued a press release stating that they have sent a letter to the Chairmen of all FTSE-350 companies. The letters sent warn the Chairmen that they might be breaching UK Company Law by publishing accounts based on guidance from the Financial Report Council (FRC). This is a long running argument that arose during the financial crisis in 2008 when it was alleged that one of the problems was that the accounts of financial institutions ...
Post Date: December 3, 2015 Read more