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AIM shares to be allowed in ISAs?

Are Alternative Investment Market (AIM) shares right for ISAs?

Chancellor George Osborne announced in the Autumn Statement that here is to be a government-led consultation on the possible opening of ISAs (individual savings accounts) to AIM stocks. The UK Shareholders’ Association will participate in this.

The proposal is probably intended as a gesture towards adding another source of capital for cash starved smaller developing businesses.

Many investors will welcome the flexibility of being able to include quality AIM companies in their ISAs. Others will be anxious that the current IHT free status of AIM shares may be changed if they are allowable in ISAs.

A separate but related matter of great concern to many investors is the woeful lack of shareholder rights suffered by all nominee account users, which include ISAs. UKSA believes that this issue should be highlighted and linked in consultations with the Government.

UKSA members are invited to contribute to the forum on this subject, to be found in the member’s section. Non-members are invited to leave their comments here (and do please consider joining UKSA to strengthen our influence on all matters affecting private investors generally). Your views are important.

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More on the Extraordinary Persimmon LTIP

Since UKSA’s policy team first questioned this scheme, further work has been done and a detailed analysis can be found in the members’ section of this website. This shows just what an extraordinary scheme this is and a mystery why the major shareholders supported it.

Although the scheme has been adopted, UKSA believes that wider interests are affected and for this reason the matter should be pursued. As a first step, a letter has been sent to Nicholas Wrigley, Persimmon chairman, seeking answers to six key questions. This letter can also be found in the members’ section of this website under /Members Area / Policy Group Blog.

So, if the way in which business managers extract value from the companies in which you invest matters to you, watch this space! Better still, join UKSA to support our efforts to achieve better corporate governance and accountability to all shareholders, individual as well as institutional.

Here is the Persimmon proposalcolor> in full.

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Persimmon LTIP

Persimmon has dreamed up a generous new scheme for incentivising its underpaid and overworked directors. Nice work if you can get it!

At the Persimmon General Meeting held on 17th October 72% of the shareholders voted. Of those who voted 84.92% voted in favor of the new LTIP! Are you a Persimmon share owner? Did you vote in favor? Were you asked if you wanted to vote? Were you even told that there was going to be a vote? If you do own shares in PSN and the answer is no to the last three questions, you probably are in a nominee account and are the beneficial but not the legal owner of your shares.

Find out UKSA members' view on this below and in this notecolor> and read previous news stories on this website to see what UKSA says about share owners being pushed into nominee accounts.

Here is the full Persimmon proposalcolor>

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BAE SYSTEMS and EADS. UKSA writes to the Takeover Panel

Yesterday, UKSA asked BAE Systems’ directors to use their power to put pressure, both private and public, on all nominees on its share register to ensure that all their clients are fully informed about the proposals and able to instruct their nominees how to vote. UKSA has now written to the Takeover Panel, the body responsible for ensuring that the proposed merger is conducted fairly and in a principled way. The Panel’s publicly declared task is to supervise and regulate all matters to which the City Code on Takeovers and Mergers applies. Its “central objective is to ensure fair treatment for all” which UKSA views as meaning that all nominee account users must be given the chance to vote on this merger.
An edited extract of UKSA’s letter to the Takeover Panel can be found attached.

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BAE SYSTEMS and EADS. The Scandal of Investors Without a Vote

UKSA has sent letters to Dick Olver, BAE Systems chairman and to Sir Peter Mason KBE, its senior independent director, calling upon them to take whatever action is necessary to ensure that private investors in BAE using nominee accounts are enabled to vote on the proposed merge with EADS.

Anticipating that the merger will be by a scheme of arrangement, UKSA notes that as many as 86.5% of BAE Systems shares are held in nominee accounts. Calling it “shocking and utterly reprehensible..... no less than a scandal” that individual nominee account users are usually denied a vote on such occasions, UKSA wants BAE Systems’ directors to put pressure, both private and public, on all nominee account providers on the share register –
• to ensure that all their clients are fully informed about the proposals,
• to grant their clients (in good time) the opportunity to say how they wish the shares bought with their money to be voted and
• to vote in accordance with those expressed wishes and in no other way.

It cannot be right for the merger to be decided by those holding a minority of the shares. Nor would it be right for nominee account providers to vote, having no beneficial interest in the outcome, unless they were acting on client instructions.

to read more. Letters to BAE directors and note on Scheme of Arrangement attached.

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Pro Business Against Greed

A new website has been created to campaign against executive greed. An issue which UKSA very much supports.

Pro Business Against Greed was started because Sir Mike Darrington, former Managing Director of Greggs, saw how things had changed during the 24 years he had run a large public company. He noted how a shift towards marketplace comparisons had brought about a massive acceleration in the growth of executive pay, unrelated to executive performance, while at the same time, there seemed to be a distinct deterioration in both customer service and value for customers in many companies. Mike is now working with others to address the issues around excessive executive pay.

We understand that Pro Business against Greed website is under development. Anyone interested in supporting their aims might like to visit them here http://businessagainstgreed.co.uk .

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Press Release: Government Proposals on Directors’ Pay should be “taken back to the drawing board”

Responding to Vince Cable’s proposals for new reporting regulations on Directors’ Pay, UKSA’s points out that they take no account of the Kay Review, yet that Review was commissioned by Vince Cable himself.
Professor Kay has highlighted the way in which current bonus systems lead to short-term policies. He wants incentives to be provided only by company shares, which must then be held at least until the executive has retired from the business. Despite the importance of these proposals, new reporting regulations have been prepared which ignore them. UKSA says these draft regulations should be taken back to the drawing board.
UKSA has discovered that Vince Cable’s department of Business Innovation and Skills (BIS) took no account of the impending publication of the Kay Review when drafting the new regulations for company remuneration reports. Their preparation was seen as entirely separately from any action arising from the Kay Review, even to the extent of having separate teams working on these two key initiatives.
Adopting the draft regulations, issued for a consultation period ending one week from now, would simply entrench current practices, whereas major change is needed. Now that we have the benefit of the Kay Review, the draft regulations must surely be withdrawn and detailed thought given to what approach by Government will best help it achieve what Professor Kay has recommended.
Introducing UKSA’s response to the draft, Eric Chalker, UKSA’s Policy Co-ordinator, said:
“The proposed regulations would entail a mass of immensely detailed information being added to annual reports, at a time when Government is supposed to be going for red tape bonfires. Those drafting the regulations clearly believe that top directors’ performance can be satisfactorily measured by short term metrics, but this is not so. As Professor Kay has stated, in the interests of their companies, directors should be taking the long view We believe that Government needs to look at the whole picture and give a strong push in the direction that the Kay Review, itself sponsored by Vince Cable, wants us to go.”
ENDS

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UKSA calls for audit reforms to protect investors

UKSA is among a number of investor bodies seeking changes in audit practice in order to bring about better protection of investor interests. Led by the Universities’ Superannuation Scheme, these embrace the Local Authority Pension Fund Forum, the London Pension Fund Authority, Railpen, BBC Pension Fund, Threadneedle Investment Management, Royal London Asset Management, Legal & General Investment Management, The Co-operative Asset Management, Environment Agency Active Pension Fund UK, Swedish National Pension Fund, Ethos Foundation Switzerland, Pensions and Investment Research Consultants (Pirc), Governance for Owners and Proxinvest (one of a group of European proxy firms within ECGS Ltd, European Corporate Governance Service).

As well as lobbying the UK government and legislators, this group is endeavouring to influence the audit reform process initiated by Michel Barnier, European Commissioner for Internal Markets and Services. “It is vital” says the coalition, “that policy-makers do not lose sight of the purpose of the audit. The audit is intended for shareholders, to permit them to rely on accounts as a basis for monitoring executives’ performance. The audit is not for company executives, and it is not for the auditors.” UKSA members might think it worth while to lobby their own MEPs on the matter.

UKSA takes a stronger line on some matters than the group, but has signed the group’s position paper (available for download here).

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Northern Rock 5 years ago !

Calling all former Northern Rock Depositors

It is almost 5 years since our TV screens and newspapers were filled with pictures of the queues outside Northern Rock branches.

There is a building media interest on how the past 5 years has worked out for those involved in the ‘Rock' whether they be employee, shareholder, depositor or even all three. BBC Newsnight are looking to speak to former savers in Northern Rock who stood in those queues five years ago to look at how the last 5 years as turned out for them in the aftermath of the credit crunch.

Joe Lynam is the BBC’s Correspondent for Newsnight and can be contacted at joe.lynam@bbc.co.uk

Ideally Joe is looking to speak to people in Northern Rock’s heartland in the North East.

Chris Hulme UKSA Chairmain

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