Share certificates give shareholder rights, nominee accounts do not

The Sunday Times, on April 26, has quoted Hargreaves Lansdown as claiming that private investors “have the same rights and benefits under a nominee service” as those holding shares in certificated form. This is incorrect and seriously misleading.

Some nominee account providers provide additional services which go some way towards compensating investors for the shareholder rights they do not have, but these are not the legal rights enjoyed by investors who have their own names and addresses on the relevant share registers. Not only are investors using nominee accounts not the legal owners of the shares bought with their money, they have only minimal protection if a nominee account provider fails to keep proper records and stay solvent and such situations are not unknown. These significant differences are not spelled out to investors when offered inducements to transfer to a nominee service and this is something which the UK Shareholders’ Association condemns.

Nominee accounts can be of benefit to some investors and it is not possible to invest through an ISA or SIPP in any other way (although this should not prevent an investor’s name and address being placed on the register with the nominee’s), but how such investors are treated depends on each nominee’s terms of business which can be changed arbitrarily at any time, leaving such investors trapped.

UKSA's current campaign for shareholder rights: Runnymede Declaration.
Also see Penalties of Nominee Accounts

Do Alliance Trust directors deserve support?

Do Alliance Trust directors deserve the support of their thousands of individual investors in resisting Elliott Advisors’ attempts to influence the company’s performance? Or is the hedge fund genuinely seeking long term improvement, rather than just looking for short term gain?

The UK Shareholders’ Association (UKSA) believes that, as always, investors must answer these questions for themselves, but our concern is that many may be left out of this process. Once again, those holding shares in nominee accounts are liable to be left ill-informed and potentially without the ability to vote or, as one large broker has declared, have their shares voted instead, in bulk, by their nominees as they think fit. This is a continuing scandal, which the new government must address.

Alliance Trust has an annual investor forum in London, in addition to its AGM in Dundee, so its directors make an effort to engage with investors. Those in its own savings scheme will also receive regular information, but perhaps more is required to facilitate investor input, especially for the thousands of investors in other nominee accounts. Four years ago, UKSA asked the Trust’s directors to establish a representative private shareholders’ committee, to enable regular, two-way engagement to take place. The Alliance Trust board rejected this idea, but may be regretting this now it wants active investor support.

For further information see and

A forum for UKSA members' views is open to members only in the members area.

'everyinvestor' interview with John Hunter

'everyinvestor' Q & A with chairman of UKSA John Hunter, discussing corporate governance, investing habits and more .... Read the 'everyinvestor' article here

Working in Brussels for private investors in the UK

The UK Shareholders’ Association (UKSA) is an active member of Better Finance for All, the Brussels-based organisation that works for private savers and investors within the EU and for 2015 has voluntarily increased its subscription by 50 per cent.

As the EU plays an increasing role in member states’ financial markets, it becomes increasingly important that UK private investors are well represented in Brussels. An UKSA director sits on the Better Finance board and three representatives from UKSA comprised the UK contingent at its general assembly in Wiesbaden last December, followed by a conference on shareholder rights.

Shareholder rights are in focus in the EU because of planned revisions to the Shareholder Rights Directive (SRD) of 2007. Unfortunately, EU officials and MEPs do not understand that, in UK law, investors in nominee accounts are not recognised as shareholders, so the 2007 SRD was of no benefit to these investors and, unless the proposed SRD is suitably amended it will be no different. Working with its Better Finance representatives, UKSA has drafted and submitted appropriate amendments for which it is seeking European Parliament support, but interest in the subject even among UK MEPs is lacking, which is likely to be at least part because of ignorance, which UKSA hopes to remedy. Members of the relevant EP committee, JURI, can be found here.

Shareholders to pay for directors’ mistakes at Wm Morrison Supermarkets

Investors in Wm Morrison Supermarkets plc are being asked, at very considerable expense, to let current and former directors off the hook, scot-free, for repeated breaches of the Companies Act. Nobody is resigning because of this.

In a 20 page circular, giving notice of a general meeting on 6 March, the directors admit to having paid dividends and made share buy-backs from 2012 to 2014 when the company had insufficient distributable profits as shown by its audited accounts and did not take action it could have done to avoid this. Morrison’s ten well-paid directors twice overlooked this responsibility. A special resolution is now being sought to waive all claims the company may have against them, but it is being put to shareholders as just one part of an all-embracing resolution which also regularises the dividend payments and share buy-backs.

There is a huge conflict of interest between the directors and the shareholders in proposing a single, composite resolution. Shareholders should not be expected simply to excuse directors for such a basic failure and pick up the costs for doing so. There should be two separate resolutions – one for dividends and share buybacks, but another to relieve directors of their liability for costs which shareholders may wish to vote against. The top ten shareholders, holding 46.5% of the equity, should demand this.

Morrisons General Meeting Notice 2015

A Victory for the Little Man (and Woman)

Today’s announcement that takeovers by schemes of arrangement are to be subject to tax is a victory (albeit a small one) for private investors. See page 61, paragraph 1.249, of the full Autumn Statement for which a link appears below. The UK Shareholders’ Association (UKSA) welcomes the news, because we believe it will result in fewer takeovers by this method.

Such takeovers deprive investors holding shares in nominee accounts of any say in the decision. This is because these takeovers are decided by vote and private investors in nominee accounts do not have the right to vote, even though the future of their investments is at stake. UKSA has long seen this as scandalous, not least because investors face so much pressure to use nominee accounts.

A takeover by scheme of arrangement gives an acquirer 100 per cent of the shares regardless of how many shares have been voted. The High Court gives no protection to those excluded from the vote because it is bound by precedent to ignore the degree of participation. The Takeover Panel gives no protection either, despite its “central objective (being) to ensure fair treatment for all”, because it ignores those who are not on the share register.

Would-be acquirers love the arrangement, because they buy companies cheaply – now slightly less cheaply than before but still not equitable. Such takeovers will not be equitable until all nominee account users are fully enfranchised.

H M Treasury Autumn Statement 2014


Two members of the UK Shareholders’ Association were pleased to have the opportunity of speaking at the London Investor Show, 24th October 2014. Malcolm Howard tackled “How to read published accounts to spot undervalued companies” and Eric Chalker answered the question, “Do you really own your shares?” A good number of new members joined at the UKSA stand, where many interesting conversations too place. The organisers’ video of the event can be found here:

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