Edited extract from a subsequent email from Eric Chalker to the Deputy Editor, 13th February 2011
Thank you for taking up the issues raised in my letter to the editor on behalf of the UK Shareholders' Association and private investors generally. I think the resulting article will have been quite revelatory for many of your readers and I'm delighted that the subject has received an airing in such an influential magazine. There is just one remaining matter of concern.
Under Part 26 of the CA 2006 (which covers takeovers by ‘schemes of arrangement’), the 50% and 75% requirements (for these to be approved) apply only to those actually voting. This is radically different from the 90% required under the Takeover Code, which applies to all the equity in issue. When you couple this difference with the exclusion of nominee account users (as the article very clearly explains), it is immediately evident that a minority of shareholders, in both number and equity held, can determine the fate of a company and when I personally attended a High Court hearing in one such instance the judge made it clear that, because of a never challenged judicial precedent, there is, astonishingly, no minimum threshold.
The most dramatic instance of this I have seen was in the acquisition of HBOS by Lloyds TSB. Putting to one side what might be regarded as the very special circumstances of the time, it is nevertheless remarkable that while the shares actually voted came to 54.9% of all those in issue, the number of shareholders participating was a hugely unrepresentative 4.9% – 101,425 out of a total of 2,066,379 (figures obtained from Computershare Investor Services at the time).
