Foresight 4 VCT AGM Result

At the Annual General Meeting of Foresight 4 VCT today, all three board directors only very narrowly managed to get re-elected – with 50.01% voting FOR Chairman Philip Stephens, 51.69% voting FOR Peter Dicks and 52.69% voting FOR Simon Jamieson. There were substantial votes against several other resolutions, including 41% AGAINST the allotment of shares so that Resolution was lost.

The directors had a board meeting after the AGM so they no doubt were considering their position bearing in mind that although ShareSoc wrote to a number of the larger holders of the shares, we did not write to all of the shareholders. We may hear more soon, but there was a strong feeling expressed in the meeting that it was time to “refresh” the board with new members to replace the existing long standing directors as a minimum. And better to do it sooner than later.

I will write a full report of the meeting over the weekend, which was rather a long AGM with many issues covered. It will be posted on the ShareSoc Members Network. Our thanks to Tim Grattan and other investors for the considerable work put in to get some changes at this company.

Roger Lawson

FCA Consultation on MiFID II

On 29th September the FCA launched a third consultation paper on the MiFID II directive. Now, this may appear to be a very dry subject, of little significance to individual investors, but the current UK regulations implementing MiFID have a profound effect.

These regulations lie at the heart of a number of problems affecting us, for example:

  • Ability to participate in share placings. Often only “qualified investors” can participate in placings and the criteria for being qualified may be hard for many individual investors to satisfy.
  • Access to company research. Much research is restricted to professional or “elective professional” investors. Again, it can be hard for many individual investors to meet the criteria for these categories.
  • Ability to trade “complex products”, which again can be restricted to professional investors (or only offered to individual investors with professional advisors). These products can include important hedging tools such as options and warrants. There was a risk that shares in investment trusts might be considered to be “complex products” under MiFID II but, fortunately, this risk appears lower now.

The objective of these regulations is to protect retail investors from being misled but, as with so much well-meaning regulation, the effect has not been as intended, rather it creates an unlevel playing field, where professionals have access to information and are able to trade in advantageous ways that many retail investors find themselves barred from.

So, in order to protect our members interest, ShareSoc intends to study the consultation paper (or as much of its 568 pages as we can!) and make a submission to the FCA. If you have any interest in these matters, you can find the consultation here: and we would be happy to take your views/comments into account in our response. Please contact us to let us know your views.

Mark Bentley

Asian Citrus Shares Suspended

Asian Citrus (ACHL) is one of those Chinese AIM companies that you have heard so much about – for example in the BBC Radio Programme reported on in my last blog post. The revenue has been falling and the losses rising at Asian Citrus but any investors still holding the stock are going to have a very bitter taste in their mouth after the latest announcement.

Today (29/9/2016) the company announced that it could not issue its Annual Accounts on time and hence the shares have been suspended on both AIM and the Hong Kong Stock Exchange. What’s the problem? Simply that the auditors have met a Mr Man Gui Fui, a manager in the company’s subsidiaries who has provided bank statements that seem to bring into question those previously reviewed and in addition another manager, Mr Chen De Qiang, has indicated that balances on customer and supplier accounts may be incorrect. The auditors (who incidentally changed in January of this year, usually a warning sign), are unable to judge the “scale of materiality or misstatement” so they require to do a lot more work before approving the accounts.

The story may be even more complex in that the directors have been told that these allegations may be related to an attempt to stop the major transaction announced on the 25th August. But it is in essence the same old story that we have seen at many AIM companies, particularly Chinese ones. Namely that the accounts are likely to be fictitious and the internal affairs of such companies are like the wild west, or now perhaps the wild east, where nobody can be trusted and the rule of law is barely in evidence.

The management of AIM at the LSE must surely make some tough decisions about allowing any more Chinese companies to list until they get to the bottom of these problems and can be assured that the moral climate and business practices in China are more like those in the West. ShareSoc has also made some suggestions about how to improve AIM which would have helped to avoid these kinds of difficulties – see

In the meantime, wise investors should simply avoid foreign companies that are listed on AIM, and particularly Chinese ones.

Roger Lawson

AIM – Is Enough Being Done to Protect Investors?

Last night (27/9/2016) BBC Radio covered the topic of the AIM market and asked whether enough was being done to protect investors. See File on Four . Here’s a brief summary of the contents with some comments.

The BBC visited Hotel Chocolat, a recent AIM listing, and spoke to Angus Thirlwell, the CEO. He indicated they wanted “light touch regulation” so as to avoid a lot of paperwork and said it was one of the attractions of AIM. Comment: it seems that AIM promotes the market on that basis, while telling investors that in terms of regulations and oversight it is very similar to the main market. Somewhat contradictory is it not?

ShareSoc Director David Stredder explained that almost everyone might be invested directly or indirectly in the AIM market and that now that ISAs have been opened to AIM holdings there are a very wide range of investors.

Simon Taylor-Young explained the role of Nomads and suggested they are supposed to act as both policemen and advisors. He mentioned the problems of AIM companies in one country in particular – China and explained what happened at Naibu.

Richard Edwards, a director of Anpario, explained how he had invested tens of thousands of pounds in Naibu. At one time the company was valued at £70m but it fell over 90% (it’s now delisted and the shares are in essence worthless). Despite some negative announcements he continued to hold the shares. He asked what happened at Naibu and suggested “no one really knows”. Investor Brian Geary flew to China and found information about the company that was not disclosed in the IPO – loans undeclared for example. (Comment: in other words a typical example of complaints about AIM companies that information was concealed to investors, inadequate due diligence done before listing, and thereafter failure to disclose significant news when it comes to light that all might not be as it appeared). It was said the management of Naibu have now vanished.

Giles Elliott, the former Chairman of Naibu, spoke and said he is still pursuing recoveries for shareholders. But said you cannot check all the numbers, interview all the staff or visit all the sites. Naibu Nomad Daniel Stewart was asked to comment for the programme but did not want to do so.

Marcus Stuttard, Head of AIM, then defended it. He said the Nomad model works incredibly well and had been copied in other countries. The interviewer suggested there was an issue in that the Nomads are paid by the companies. Marcus said that Nomads are not policing the companies. But Nomads are held to account and there have been a number of situations where they have been censured and in some cases it caused them to go out of business.

Simon Taylor-Young criticised AIM for not taking action when problems appear in companies. He suggested AIM should be doing this. Marcus Suttard said there were a number of problems – a lot related to the economic backdrop in China. Comment: this is not so surely – the problems were due more to cavalier approaches to accounts and regulations in China, and the inability for directors and shareholders to enforce rights under Chinese law. When asked what he had done to ensure it cannot happen again, Marcus focussed on the complete disclosure of the risks involved in investing in AIM companies (effectively saying that investors should and could have their eyes wide open on the risks they might be facing).

The programme then turned to the activities of former England cricketer Phil Edmonds and his colleague Andrew Groves who launched 9 AIM companies operating in Africa – mainly mining companies but also a medical business named African Medical Investments. This story has been well covered by an organisation called Global Witness. The allegations are that Edmonds and Groves profited by buying a property for $2m (via an offshore company, thus concealing their interest), and then selling it on to the AIM company for $5m which was higher than it’s real value. They also covered the case of Sable Mining where allegedly the mine was acquired by bribing local officials. {Note: both companies subsequently delisted). The allegations are denied.

The programme presenter suggested that AIM is unable to regulate such companies effectively but Stuttard suggested it was simply the reality of risk capital.

David Stredder summarised the position by saying he wants stronger checks on companies before they list on the market and that regulations should be upheld and enforced.

In conclusion this was useful coverage of some of the problems of AIM faced by investors. It was reasonably well balanced and factually correct, but some might think that AIM management got off somewhat lightly.

As readers are probably aware, ShareSoc has been running a campaign to improve the AIM market because of the numbers of complaints from our members (the companies mentioned in the BBC programme are just a very small sample of those who have gone bust or delisted). See for more information, and to register your support.

Indeed we had a meeting with Marcus Stuttard and colleagues the day before the programme went out and will report further on that later. As we said at that meeting, we do not wish to see investors discouraged from investing in AIM companies because it can be very profitable to invest in good early stage companies. But the AIM market does need to be improved to remove the gross abuses and unacceptable risks that investors face. If the BBC programme concentrates the minds of LSE management to improve matters, so much the better.

As David Stredder has pointed out, taking into account all the AIM failures there could have been many millions of pounds diverted into the pockets of individuals or otherwise lost that could have been invested in sound companies.

Roger Lawson

BBC Radio Programme on AIM

Are British investors being ripped off by unscrupulous businesses exploiting the AIM market? This is one of the questions being tackled on the BBC tomorrow night (27/9/2016) in a File on Four radio programme – BBC R4 at 8.00 pm – see

It should make for interesting listening.

It certainly came up as a topic of conversation in our meeting with LSE management today where we discussed the problems of AIM. More on that later and I hope to write a report on the BBC programme in due course.

Roger Lawson

Foresight 4 VCT Update

ShareSoc wrote to shareholders in Foresight 4 VCT (FTF) in advance of the AGM on the 30th September. We suggested shareholders vote against the re-election of the directors. For the background, see: . Subsequently the board of the company indicated they were considering a merger with Foresight 3 VCT and also commented on our letter.

A riposte has been published here: As the note says, the tone and content of the comments are typical of a board attempting to distract shareholders away from their own failings.

Shareholders in Foresight 4 are encouraged to attend the AGM to learn more about the issues.

Roger Lawson

ShareSoc Events – Altrincham, Richmond and Brighton

This is a final reminder that we have a company seminar in Altrincham (near Manchester) next week (Tuesday the 27th September) with four interesting smaller companies presenting.

These are:

– FRENKEL TOPPING GROUP (FEN): Specialist asset manager and advisor to vulnerable individuals.

– GRESHAM HOUSE STRATEGIC (GHS): Investment company with a focus on smaller companies.

– SRT MARINE SYSTEMS (SRT): Development and supply of automatic identification system (AIS) technologies.

– VIPERA (VIP): Mobile financial services provider.

This is a great opportunity to learn about these companies and meet your fellow investors (and ShareSoc Members). The event starts at 5.30 pm and is free to everyone (and that includes refreshments of course).

Go here for more information and to register if you have not already done so:

We also have “Supper” events in Richmond (Surrey) on the 4th October, and in Brighton on the 11th October where 1PM is presenting. Go here for a full list of ShareSoc events in the next few weeks (but some are already over-subscribed) so the moral is book soon!:

Roger Lawson