Regulations and Law

A Christmas present for the kids, and goodwill from Avocet directors

The Government has announced that it will allow Child Trust Funds to be transferred to Junior ISAs. The investment returns and charges on Child Trust Funds compare poorly with those available in ISAs so this is a welcome move. The only reservation is that it may not be possible to implement this until April 2015.Avocet Mining, a gold mining and exploration company, have also got into the spirit of the season by announcing that the fees paid to the Chairman and ...

Fiduciary Duty Consultation – no major changes proposed

The Law Commission is running a public consultation on the "Fiduciary Duties of Investment Intermediaries". This was prompted by a recommendation in the Kay Review that examined the issue of "short-termism" in business and investment decisions. It suggested that this area should be examined. One question posed was whether the legal concept of "fiduciary duty" should be extended so that investment intermediaries had clearer moral responsibilities to their clients.For example, trustees of pension funds have a general legal obligation to act ...

VCTs – Stopping the tax relief abuses

The Government has published its response to the public consultation on share buy-backs in Venture Capital Trusts (VCTs). In particular the proposals put forward were aimed at stopping "Enhanced Share Buy-Backs" where VCTs were buying back shares from investors and immediately reinvesting the cash paid to investors in a new shares issued to the same investors, thus enabling them to obtain tax relief on the same original cash more than once.There was a general acknowledgement in the responses to the consultation ...

B&B Finance Director fined

Christopher Willford, the Finance Director of Bradford & Bingley in 2008, has been fined £30,000 by the Financial Conduct Authority (FCA) for "failing to provide the board with up-to-date information about B&B's financial position" ahead of the right issue in May of that year. The FCA state that Mr Willford "failed to identify and investigate potentially material risks, or alert the board, at a crucial time for the firm. Bad mortgage debts, arrears and repossessions had all risen while the net interest ...

The Chancellor’s Autumn Statement – What’s in it for investors?

You may well be worse off if you are dead. The Government is to clamp down on the payment of state pensions to people who are dead, which is apparently a particular problem when they move overseas upon retirement.Otherwise these are come of the changes and how they may affect individual investors:- As expected, there is to be a restriction on Venture Capital Trust (VCT) "enhanced share buy-backs" upon which there was a recent consultation. In future VCT investments that are ...

FCA Consultation on Crowdfunding

The Financial Conduct Authority (FCA) is consulting on a new regulatory approach to cover "crowdfunding".  Crowdfunding is in essence a direct approach to investors for either equity investments in early stage companies, or loans to similar companies. It has become popular of late due to the emergence of various web-based platforms to collate the interests of many small investors, but can also be employed by companies to make direct approaches to investors. ShareSoc looked at one of the latter examples (Clear ...

RBS, Hibu and the unacceptable face of banking

There have been extensive media comments lately on the activities of the Royal Bank of Scotland in lending to smaller businesses, and what they did when those businesses got into financial difficulties. The articles printed focussed on two reports on the activities of RBS - a report commissioned by the bank by Sir Andrew Large, and one by Lawrence Tomlinson* who acts as a consultant to the BIS Department. Both reports, but particularly the latter one, were quite damning about the ...

Why should investors not see performance fee details at Northern VCT?

Northern Venture Trust (a VCT) introduced a management performance fee at a General Meeting on the 18th July. They did not have one before even though they had outperformed the very similar Northern 2 VCT over the last ten years who do. I spoke against the introduction of such a fee at the General Meeting, and raised questions about how the fees were to be calculated, as did another shareholder. The calculations were not at all clear from the meeting notice. As ...

Great news – real company owners to be disclosed

The Prime Minister has announced that the details of who really owns and controls UK companies will be made publicly accessible. More details will be announced in early 2014,, but the key paragraph in the announcement from the BIS Department includes the statement that the Government will “………potentially use as a model the disclosure regime that currently applies in relation to disclosure of information on company shareholders. This would mean that companies would hold information on the names and addresses of ...

Bulletin boards and Globo

I was at the Annual General Meeting of Ideagen yesterday (a full report is here), and happened to talk to one of the advisors present about recent events at Globo, another software company. We agreed there was a problem with bulletin boards that should be tackled. As mentioned in a previous blog entry, Globo has come under attack in the last few days on a number of bulletin boards and financial blogs for the quality of its business and its accounts (more ...