Moving House!

Following the launch of ShareSoc’s new website, www.sharesoc.org, this blog has now been moved to that site and you can find it here: https://www.sharesoc.org/category/blog/

The blog on this site is now closed, and all future posts will be made on the site linked above.

If you are subscribed to this blog, unfortunately your subscription will not be carried forward and you will need to subscribe to the blog on our new site. This is very easy: just click on any post, and then enter your email address in the form at the top right of the page, illustrated below. Click “SIGN UP NOW” after entering your address. Thereafter you will receive emails once a day advising you of any new posts.

blogform

Please note that we now have similar facility for our events: https://www.sharesoc.org/events/ Click on any ShareSoc event (not 3rd party events) and you will find a similar sign up form on the right hand side. If you submit your email address to that form, you will be notified whenever we post a new event.

We hope you are enjoying our blog and look forward to welcoming you on our new website!

 

Potential Claim vs Media Corporation

ShareSoc member Steven Egan is leading a campaign seeking redress against the former Media Corporation plc and its directors.

Details of that campaign can be found here: https://www.crowdjustice.com/case/defrauded-purple-lounge-registered-customers/

Please note that ShareSoc has not investigated the allegations made by Mr Egan’s campaign and cannot vouch for their accuracy. For that reason, ShareSoc does not endorse the campaign and this post is for information purposes only.

The former Media Corporation and its directors dispute those allegations.

Fusionex – Another AIM Company Disappears into the Night

In an announcement late Friday afternoon, after market close and just before the long weekend, AIM listed Fusionex announced that it will seek to delist from the AIM market. It’s not clear why this is good for private investors, the company is profitable and has no need to raise funds. The RNS says that a meeting will take place in Malaysia on 15 June to vote on the matter, and that all of the Directors representing 41.93% of shares are in favour. Almost all of these are in the hands of the CEO, Ivan Teh.

Unfortunately for investors, this would leave them with no official market in the shares. While there is an intention to put in place a matched bargain settlement facility, this is unlikely to provide much, if any liquidity. Syqic, another profitable Asian company which recently delisted itself, has a matched bargain facility. The trading volume in the last few months? Nil.

It appears that the cancellation notice has already been delivered to AIM in anticipation, with cancellation expected on 27 June, less than a month away. A further RNS before the market open this morning saw the resignation of joint broker Peel Hunt, as well as Chairman John Croft. The share price reaction today was brutal, with the shares down 64% by the close. Investors participating in the IPO in 2012 have lost two-thirds of their money – so far. Shareholders will soon be in grave danger of being faced with a ‘lowball’ bid for their shares if they want to realise any value at all.

Unless many of the non-Board holders vote against this delisting, it is sure to happen. While this is a Special Resolution, requiring 75% of votes cast, Mr Teh and a colleague control 54% of the shares. In order to be defeated, at two fifths of the remaining 46% of shares need to be cast against them. Unfortunately, voting turnouts are typically low for listed companies, allowing this type of behaviour to persist; it would take a concerted effort to defeat this resolution. The nominee system makes it difficult for shareholders to obtain timely information about corporate actions, and voting can be difficult or even impossible. This is particularly true given that the meeting is only 2 weeks away. All of this works to the benefit of the CEO who wishes to delist his company, and who will soon be safely away from regulatory scrutiny and market discipline.

The net result will be that yet another name is added to the list of Asian based companies which have turned out to be a disaster for investors. Naibu, Camkids, Hirco, Jiasen, Taihua, Asian Citrus, Syqic, and many more. In the absence of any support from AIM for investors in these cases, investors would do well to be ever more wary of foreign companies listed in London.

Please support our shareholder rights campaign to reform the nominee account system, and make it harder for managements to use the barriers this system throws up to discourage shareholders from voting in their own interests.

Mark Lauber

RBS Potential Settlement: Where’s the Justice?

It seems that the major players in the RBS Action Group have accepted the latest RBS offer. See http://files.constantcontact.com/2fe662f5101/de78446f-b327-4d5e-9eee-5fcd584c7e8c.pdf

This has, in effect, enabled RBS to bully the small individual shareholders into also accepting the settlement. I say “bully” because RBS are threatening anyone who pursues the case to risk having costs awarded against them.

So now the case will be settled. No-one will be found guilty. RBS will pay out £800 million (of shareholders’ money) to a group of its shareholders without admitting any culpability or liability. It all gets swept neatly under the carpet and no one goes to jail. It has taken 9 years for this to happen. It is not just RBS – the HBOS Reading trial took nearly ten years to be investigated and brought to court.

The key players do not come out of this well. Something is wrong with the SFO, CPS, FCA, FRC, BEIS, etc when £12 billion of RBS’ shareholders’ money raised in a rights issue can disappear so quickly.

Very, very few people in the UK have gone to jail as a result of their actions that led to the 2007/08 Financial Crisis, yet millions of people have suffered severe hardship as a result. The SFO, Crown Prosecution Service and/or BEIS should be given more resources and told to pursue problem cases much more speedily. Companies should not be allowed to hide behind expensive lawyers. The whole process of settlements where management admit no blame and shareholders pay the fines/settlement amounts mean management get off scot free and also needs a review. These steps (plus others no doubt) are required to rebuild trust in business and to tackle what Mrs May calls the “anything goes” business culture.

Cliff Weight

A tale of three AGMs

by Cliff Weight

Last week I went to 3 AGMs. Aviva on Wednesday, 10 May in London and then Lloyds in the morning of the 11th and RBS in the afternoon, both in Edinburgh.

Aviva was very well attended with about 600 people in the Queen Elizabeth Centre. There were plenty of displays of the Aviva products, lots of staff to explain them and deal with any customer issues or complaints. There were also stands explaining the business (noticeable by its absence was Aviva Investors) and how Aviva contributes to the community. For those arriving early, and many did, there was plenty to see and do and to mingle with fellow shareholders and directors who also graced this pre-AGM event.

I wanted to ask a question. I was asked to register the question with a summary and was asked when I would like to ask the question and it was agreed I would ask not as one of the first but later in the meeting. There were 2 question stations and questioners were directed by staff to station A or B in an orderly fashion.

Sir Adrian Montague, the chairman, opened the meeting by saying he regarded this as one of the most important if not the most important day of the year for the company and stressed the importance of shareholders without whose money the company could not exist. After excellent presentations from the Chairman, Chief Executive and one other director, Sir Adrian opened the meeting for questions and introduced his “three strikes and you’re out rule”. I commend this! Questioners were allowed to ask a maximum of three questions or speak for three minutes but not to exceed either. He pointed out that, if you could not make your point in three minutes, you will have probably lost the audience’s interest by that stage. He also said that this was a shareholders’ meeting and that questions about customer issues were not appropriate and could be raised upstairs with staff who were there ready and prepared to deal with such issues. The meeting appeared to me to nod with approval at this approach which he maintained with almost 100% success. This led to a good series of questions and all those who wished to ask questions appeared to be able to do so.  Sir Adrian was an excellent AGM chairman.

A goody bag was provided to all shareholders including discounts for Aviva products, with coffee and biscuits beforehand and an excellent lunch afterwards. This was a very happy, informative AGM and Aviva are to be congratulated.

Lloyds was the second-best AGM of the three, with about 250 attendees, at the Exchange Centre in Edinburgh. The large auditorium was only about 20% full. There was no goody bag but there were plenty of handouts including bars of chocolate with the Lloyds motto “Helping Britain Prosper”, which were to be highly useful later in the day. There were a number of stands but the emphasis seemed to be on history and charitable foundations, together with a number of examples of businesses where Lloyds had helped them prosper. I would have like to have seen more stands explaining the different business lines, particularly Scottish Widows and how the Bank creates shareholder value.

The meeting was timed at a convenient 11 AM, which meant I could fly up from Gatwick on an early morning flight.  There are, however, no plans to change the articles of association to permit the AGM to be held in London which would of course be far more convenient for the vast majority of the Lloyds shareholders and might even encourage more fund managers to attend.

I registered my question and was given a yellow form which enabled me to sit near the two microphones. Staff called questioners in turn and this process worked well.

The chairman opened the meeting by setting the scene well, stating the purpose of the company was to help Britain prosper and to be the best bank for customers and shareholders. He said this requires creating a positive culture and removing older parts of the culture that were not appropriate, including dealing fairly and openly with past problems. He referred to the HBOS Reading trial and said now the trial had finished they will try and compensate claims as quickly as possible, in weeks not months. I mention this as it was relevant to how he answered questions later.

He spoke for 24 minutes, followed by the chief executive who spoke for 20 minutes and the CR update from Sara Weller of about eight minutes.

The chairman then opened the meeting for questions saying that it was a shareholders meeting and questions about customer issues were not appropriate. Clearly there is a balance to be struck here, as some customer issues are examples of generic problems in the bank which need to be highlighted and resolved. However, the Chairman, Lord Blackwell was far too liberal in indulging questions about specific customer issues and hence the meeting rambled on.

It was not all tedious. One amusing episode was when Gavin Palmer, when asking a question, apologised that he would have to leave before the meeting ended to go to the RBS AGM and he said, “he felt like he was going from the sunny side here to a dark place over there.” Much laughter ensued.

I and others left the meeting in full swing at 1:10 PM in order to go to RBS.  We were not able to partake in the lunch offered by Lloyds.

RBS’s AGM was the worst that I have attended, by a long way. It was scheduled to start at 2 PM, which meant it was impractical to attend all the Lloyds meeting and all the RBS meeting. This could have been a cock up or a conspiracy. I suspect it was the latter, as a means of reducing the number of attendees. There seemed to be lots of employees and advisers and hangers on, some of whom owned shares, but I doubt if there were more than 50 other shareholders.  It is extremely disappointing that such a large company has such a poorly attended AGM and does not seem to care.

Coffee and biscuits were served before the meeting, which was rather meagre for those who had had no lunch at Lloyds!

It is clear that, unlike Sir Adrian, RBS do not regard this as the most important day of the year. After a 12 minute introductory speech from the chairmen (Sir) Howard Davies, the chief executive spoke for eight minutes and then Sandy Crombie, the remuneration committee chairman spent some time explaining the changes to be remuneration arrangements in quite some detail.

(Sir) Howard Davies opened the meeting to questions saying customer issues should not be raised and that there was a customer services desk in the room outside the meeting staffed with people ready to answer such questions (I could not locate this, but it may have been there). However, he allowed a very large number of questions which I would’ve considered to be customer service questions or customer complaints and should have been deemed as outside the scope of the meeting. I felt that most shareholders would view this is a waste of their time. It was also clear that there were very few institutional shareholders represented.

To ask a question, you did not have to pre-register it. Everyone was given a handset and when questions started we were asked to press buttons on the handset if you wanted to ask a question. So, you had no idea when you would be called or where you were in the queue. In the event, it worked OK and ShareSoc’s chairman, Mark Northway, asked the first question and I was allowed to ask two questions later in the meeting.

One questioner asked why the Chairman was badged as plain Howard Davies when he had a knighthood. (Sir) Howard meekly confirmed he had this honour. This was another sharp contrast to Sir Adrian and Lord Blackwell who proudly displayed their deserved honours.

After a mostly tedious two and half hours, the meeting closed and we returned to the pre-meeting room where I was amazed(!) to find there were no drinks and no food. Somewhat starved, I did however have my bar of chocolate emblazoned with the Lloyds bank logo which I was able to share around!

More detailed reports on these meetings are available to full members of ShareSoc, on our members’ network, here: http://sharesoc.ning.com/xn/detail/6389471:Comment:43628 (RBS report to follow).

http://www.sharesoc.org/How_To_Run_General_Meetings.pdf is a useful guide and can be sent to companies to help them improve their AGMs.

BP PLC Remuneration Policy – ShareSoc’s comments prior to the AGM

In preparation to BP’s AGM tomorrow (17th May 2017), ShareSoc’s Remuneration spokesman has prepared this post on the company’s remuneration policy and many other issues.

Overall, the changes proposed by the Company,should be considered positive.

The discontinuation of the matching share awards and simplification is particularly welcomed, as is the downward discretion applied by the remuneration committee during the year to reduce pay. However, even after the reduction Dudley’s aggregate incentive forward-looking opportunity could still be deemed to be excessive at 725% of salary.

I have commented with more detail (available to full members of ShareSoc) in the Remuneration Forum: http://sharesoc.ning.com/xn/detail/6389471:Comment:43625 . Full members will also find the Manifest reports referred to below at that location.

Comments by Cliff Weight, ShareSoc Director and Remuneration Spokesperson. Disclosure: Cliff Weight is also a non-executive director of Manifest, the global governance experts.

FRC to Investigate Redcentric Audit

Further to ShareSoc’s campaign regarding accounting irregularities and related matters at Redcentric (AIM:RCN), I am delighted to see that the FRC has launched an investigation into the audit of Redcentric’s accounts by PWC: https://www.frc.org.uk/News-and-Events/FRC-Press/Press/2017/February/Investigation-in-respect-of-PricewaterhouseCoopers.aspx

The FT also reports on this investigation today, coming hot on the heels of PWC’s embarrassment at the Oscars ceremony: https://www.ft.com/content/4e710e1e-fcfc-11e6-8d8e-a5e3738f9ae4

This article highlights that PWC is also under investigation in relation to audits of BHS; Barclays compliance; Connaught and RSM Tenon. It has already been sanctioned in respect of its audit of Cattles. Further, PWC has been replaced as Tesco’s auditor, following the accounting scandal there, and failed to detect irregularities at BT’s Italian subsidiary.

Shareholders may wish to question any firms currently employing PWC as auditors.

I am also pleased to report that two members of the campaign and I met with the Redcentric chairman and new CFO last Friday. The meeting was productive, and amongst other matters, included discussion of PWC’s performance and action being taken. I will be publishing a report on the meeting for campaign members shortly, and taking further action, as described in the report.

Mark Bentley