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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.

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