The judgment of The Hon. Mr Justice Fancourt in the matter of Sirius Minerals plc Court Hearing of 13 March 2020 has now been published and makes reference to ShareSoc’s submission, in several places, with paras 5 and 6 being the most important.
5. I have read letters from Mr Cliff Weight of the UK Individual Shareholders Society (ShareSoc). The concerns that he expresses are that the vote at the meeting that agreed to accept the offer of 5.5 pence per share was not representative of the views of the beneficial owners of the shares, the problem being that unless such beneficial owners either instructed their nominee and the registrar to transfer a share into direct ownership or the nominee or contacted the beneficial owner and asked how it should vote his shares, or the owner knew to tell the nominee how to vote, the choice of the beneficial owner would not be reflected in the vote on the resolution to approve the scheme. As Mr Weight pointed out, it takes some time to achieve a transfer of a single share to the beneficial owner, a point that was confirmed in court today by Mr Gavin Palmer, who spoke as a member of the company who opposes the scheme. He said it took him ten days at a time well before the deadline imposed by the scheme to effect a transfer. This is said by Mr Weight to put a major obstacle in the way of shareholder democracy and, as he put it in correspondence, amounted to a gross disenfranchisement of individual shareholders. He said:
“It is a comment on the law and the way nominees and company advisors tend to interpret it. It has to change, and we continue [to request] the Government and [the] Law Commission to do so.”
6. There is indeed a strong movement now to change the law in this respect, and I recognise a genuine issue about shareholder democracy [my bolding], but the court must take the law as it is, not as it might be if changes are made in the future.
The full judgement (6 pages) is available here. https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2020/1447.html&query=(sirius)
ShareSoc will be writing to the Law Commission and Government making them aware of the judgment and the need to change the law to better protect individuals who invest in shares, particularly those who invest via pooled nominee accounts.
The work on SiriusClaim continues, but we have nothing further to report at present, other than to note that the actions at Redcentric highlight there is potential for redress against companies that offend through a variety of possible measures. For example at Redcentric, there has been FRC censure on the accounts, FCA censure and scheme for £11m redress for those shareholders who were disadvantaged and ongoing prosecution of 3 individuals in the criminal court. See https://www.sharesoc.org/blog/regulations-and-law/redcentric-unprecedented-progress-for-shareholders-at-last/ for further details.
Cliff Weight, Director, ShareSoc