UKSA continues its work of responding to Governmental and Regulatory proposals. We see this as a way of increasing the profile of UKSA and to encourage such bodies to consider the private (beneficial) shareholder. We have responded to the Preliminary Report of the Sharman Inquiry which is looking into how companies deal with their responsibilities with regard to the Going Concern statements they must make. We have called for greater prudence in accounting so that companies recognise their problems sooner and so, hopefully, take appropriate action to protect their position and our investments in them. We have also raised again our policy that private shareholders should have involvement in auditor appointments. UKSA's full submission is attached.
In its submission to the first stage of Professor Kay's review into the operation of equity markets in the UK (on behalf of BIS, the Department for Business, Innovation and Skills), UKSA has asserted that they suffer from the following basic structural flaws:
- Most shareholders are not beneficial owners.
- Most beneficial owners are not shareholders.
- Non-owning shareholders (including nominees, tracker funds, funds benchmarked against an index and borrowers of stock) do not have any incentive to act like owners and may have a disincentive to do so.
- There are some shareholders with incentives that could be actively damaging to companies, particularly where conflicts of interest exist — which sometimes includes a company’s own directors.
- Most Government regulation is directed to the efficiency of the trading of shares instead of the preservation of the ownership rights that those shares should represent.
- Most regulatory logic and most interpretation of the Law fail to distinguish between shareholders and beneficial owners.
The submission lists some key issues affecting private shareholders and in addition to a lengthy extract from the UKSA manifesto provides appendices containing illustrative evidence in support of the text drawn from its members' experiences.
The whole submission may be found in the attached document.
Chris Hulme, UKSA Chairman, joined a recent discussion panel on BBC 5Live Money News, following a report from the High Pay Commission.
Chris' contribution used to be linked here, bbc.co.uk/i/b017h4q5, 1h:40m into the programme, but has now been lost.:
The UK Shareholders' Association has made a submission to the Department for Business, Innovation and Skills on Executive Remuneration consultation.
Chris Hulme, UKSA chairman, commented:
"As private shareholders we are also private citizens. At a time when the increasing gap between the haves and have-nots is seen to be inequitable and damaging society, our members want to see the companies in which they invest run by people who show both public leadership and private restraint."
The UK Shareholders Association will be represented at the 2011 London Investor Show, taking place at Olympia on Friday 21st October.
Come and visit the UKSA representatives at stand 67.
The London Investor Show have a special offer for UKSA members who would like to attend on the day.
The Financial Reporting Council (FRC) — a body of great importance for all private investors — has launched a new initiative to improve the quality of information made available to company owners — ie their shareholders. "Investors are not getting the value they should" said Stephen Haddrill, FRC CEO.
Information about the 'Lab' can be found at https://www.frc.org.uk/Our-Work/Corporate-Governance-Reporting/Our-Work-Codes-Standards-Financial-Reporting-Lab.aspx. Its purpose is to explore innovation in reporting for the benefit of investors.
Eric Chalker, the sole representative of private shareholders present at the launch, on October 14, complimented the FRC on its initiative, but also asked the Lab to focus on the boardroom, from where reports to shareholders should come. He observed, in respect of strategy, business model and risk in particular, that there was room to ask whether even directors sufficiently understand what it is that they are reporting, which scepticism was given vocal support by one of the four panel speakers.
UKSA is establishing a small committee to act as a sounding board to which the FRC will refer its proposals as they emerge, but there will also be opportunities to consult the wider membership. More information will appear in the next issue of The Private Investor. This is just one of several ways in which UKSA is working with the FRC, increasing our members' influence.
The UK Shareholders' Association has produced a response to the Financial Reporting Council's request for investors' views on how listed companies might curtail the increasing amount of disclosures they are making in annual reports.
Our letter to Mr Bill Knight, Chairman of the Financial Reporting Review Panel, has been produced by Roy Colbran, Chairman of the UK Shareholders' Association's Government Policy Group.
The UK Shareholders' Association has today responded to the European Commission's Green Paper on Corporate Governance (COM 164).
UKSA's response, led by members Roy Colbran and John Hunter, details the private investor's perspective on corporate governance and how it might be enhanced within quoted companies.
Our letter to the Commission is attached.
We look forward to continuing to represent the requirements of private shareholders with policymakers both within the UK and beyond.
Today, leading online investment community The Motley Fool, published a podcast featuring UKSA Chairman Chris Hulme.
This wide ranging discussion addressed several of the biggest issues for private investors today. Part of The Motley Fool's popular Money Talk series, the podcast is available here.