Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

[johnhemming]

What is being said is that the votes of people who hold shares in nominee accounts will be counted by the number of shares, but that each beneficial owner will not be counted as an individual beneficial owner. That strikes me as a defect in law.

[Breelander]

What is being said is that the votes of people who hold shares in nominee accounts will be counted by the number of shares, but that each beneficial owner will not be counted as an individual beneficial owner. That strikes me as a defect in law.

No, apparently ULVR are saying they will not count any nominee votes at all....

Unilever has said that votes from investors who hold the shares through a broker or other nominee will not be counted unless the shares are 'converted into certificated form'.

https://citywire.co.uk/wealth-manager/n ... e/a1159825

[johnhemming]

I saw a story somewhere else (I don't have the time to find it at the moment) which said there are two votes counted. One is by the number of shares held and the other is by the number of individual shareholders and it is the latter one that has difficulties in nominees.

It would not be unusual for this point to be missed out of an article. I don't mind looking at this issue much later today, but I have my son's birthday party to organise at the moment.

[moorfield]

What is being said is that the votes of people who hold shares in nominee accounts will be counted by the number of shares, but that each beneficial owner will not be counted as an individual beneficial owner. That strikes me as a defect in law.

No, apparently ULVR are saying they will not count any nominee votes at all....

Unilever has said that votes from investors who hold the shares through a broker or other nominee will not be counted unless the shares are 'converted into certificated form'.

https://citywire.co.uk/wealth-manager/n ... e/a1159825

Individuals must convert to certificated form to be counted well, individually, as I understand. Each of the brokers themselves (eg. Hargreaves Lansdown) will also count as 1 beneficial owner, how they will vote themselves isn't completely clear but I imagine based on the majority of votes received on their own platforms. My guess is that the majority may be the ignorant (in a good way) Dorises who have done nothing to exercise their corporate actions, which might make my own (fwiw, against) a little futile.


https://www.thisismoney.co.uk/money/mar ... enced.html

The only way for a nominee shareholder to be counted as an individual voter is to apply for a paper share certificate, a long process which involves paperwork and is expensive

Unilever has said that giant brokers such as Hargreaves Lansdown will only count as a single shareholder when the votes are counted, even though they look after the stakes of huge numbers of people through nominee accounts.

Rightly or wrongly I'm becoming less and less bothered about the corporate structure as this epic thread continues. ULVR contributes 3.6% of my overall income, that weighting is unlikely to change my overall income much whatever the outcome of the vote. There are better yields on offer elsewhere.

[ayshfm1]

Interesting development and a can of worm Unilver would normally not have opened, however if they win this vote they will avoid the repercussions. I think we can take it as a given that they worked out they were going to lose the court vote, even if they won the main one, so it was either fold or double down. Managments are by defintion arrogant so you expect the default response to be upping the ante.

It long struck me as odd that we shareholders are supposed to hold board excesses to account (and hence why we have to accept the consequences when they do things which incurr fines and hurt share values) but that bulk of us in nominee accounts have it made difficult to actually carry this out.

I suppose it's a cost thing, we get cheap holding/dealing in exchange for being largely disenfranchised onlookers. This might be the catalyst to change things.

[ayshfm1]

Rightly or wrongly I'm becoming less and less bothered about the corporate structure as this epic thread continues. ULVR contributes 3.6% of my overall income, that weighting is unlikely to change my overall income much whatever the outcome of the vote. There are better yields on offer elsewhere.

The guy stting to me in work sold out exactly on exactly that logic. John Mcdonnel also added a "real" reason to go to Holland, as opposed to the made up ones the board was advancing.

[Gengulphus]

I saw a story somewhere else (I don't have the time to find it at the moment) which said there are two votes counted. One is by the number of shares held and the other is by the number of individual shareholders and it is the latter one that has difficulties in nominees.

For Unilever plc (i.e. the current UK company), which needs a scheme of arrangement to put the simplification in place under UK law, there are two votes, one at the Extraordinary General Meeting and the other at the Court Meeting (which will be held at the same place on the same day, one immediately after the other). The conditions for the Extraordinary General Meeting vote to pass are purely and simply a 75% majority by number of shares. The conditions for the Court Meeting vote to pass are a 75% majority by number of shares and a majority by number of shareholders. Both votes must pass for the scheme of arrangement to go ahead.

For Unilever NV (i.e. the current Dutch company), which needs to do a "triangular legal merger" to put the simplification in place under Dutch law, there is a single vote, which needs a simple majority by number of shares.

It would create a total mess for one of the UK scheme of arrangement and the Dutch "triangular legal merger" to go ahead and the other not, so the whole simplification is subject to conditions that all three votes pass. This is stated in detail in Unilever's Scheme Document (the relevant conditions are on pages 25-26 if anyone wants to check).

These are legal requirements that IMHO the Unilever management would be totally insane to try to ignore or manipulate by trying to deny shareholders their votes or give non-shareholders votes (other than as proxies for shareholders). That applies especially to the Court Meeting vote, which is likely to be the most critical one, since that's being done for the High Court of England and Wales: trying to ignore or manipulate its vote results seems highly likely to me to count as contempt of court...

However, careful examination and consideration of the proxy voting forms and their notes that I've received (as a holder in a CREST account) does say that there is likely to be a problem about the number-of-shareholders requirement for the Court Meeting for holders in a nominee account. The problem is that they are not the legally-registered owners of the shares they own - their broker's nominee company is. So it's that company that gets the proxy voting form and returns it. Both forms do allow the legally-registered shareholder to split their shares between voting for and against - one has to read the notes carefully to find out how, but it is there: one writes the numbers voted each way into the boxes rather than the normal "X" (for the EGM form) or signature (for the Court Meeting form). That allows a nominee company to reflect its clients' voting intentions accurately for the number-of-shares requirements - they just tot up the shares of those who have asked for their votes to be cast "for" and "against" and enter the two numbers. And indeed, an individual shareholder might do the same if they were holding the shares jointly with others and they disagreed about which way to vote.

But there's no provision on the Court Meeting proxy voting form to declare the number of underlying beneficial shareholders (and on thinking about it, I can see why not - it would have rather obvious potential for abuse!). So unless a nominee broker's clients don't include anyone who asks them to vote "for" or don't include anyone who asks them to vote "against", their nominee company ends up voting both "for" and "against". And presumably that either counts as one each way or none at all for the number-of-shareholders requirement, but either way, it makes no difference to whether there is a simple majority on that requirement...

If I've understood that correctly, it explains Unilever's reported statements without nominee holdings not counting and the need to rematerialize them as a certificated holding (though I think transferring them to a CREST account would do the same job), without implying any wrongdoing by Unilever's management. And it's also rather unfortunate, especially for ISA holders, as shares in ISAs are legally required to be held in nominee form, not as certificates or in CREST form. :-(

Gengulphus

[Alaric]

If I've understood that correctly, it explains Unilever's reported statements without nominee holdings not counting and the need to rematerialize them as a certificated holding

Depending on how many there are and whether they bother to vote, that could leave the Company's fate in the hands of the certified shareholders if there are more of them than institutional holders.

[johnhemming]

For Unilever plc (i.e. the current UK company), which needs a scheme of arrangement to put the simplification in place under UK law, there are two votes, one at the Extraordinary General Meeting and the other at the Court Meeting (which will be held at the same place on the same day, one immediately after the other). The conditions for the Extraordinary General Meeting vote to pass are purely and simply a 75% majority by number of shares. The conditions for the Court Meeting vote to pass are a 75% majority by number of shares and a majority by number of shareholders. Both votes must pass for the scheme of arrangement to go ahead.

For Unilever NV (i.e. the current Dutch company), which needs to do a "triangular legal merger" to put the simplification in place under Dutch law, there is a single vote, which needs a simple majority by number of shares.

That seems right to me save that I would think it would be ultra vires rather than contempt of court to count the votes in an unlawful manner.

There is an interesting question as well about how to identify shareholders who hold stock through different nominee companies and with different tax wrappers. If this were to be resolved through statute that would also have to be taken into account.

[mike]

If I've understood that correctly, it explains Unilever's reported statements without nominee holdings not counting and the need to rematerialize them as a certificated holding (though I think transferring them to a CREST account would do the same job), without implying any wrongdoing by Unilever's management. And it's also rather unfortunate, especially for ISA holders, as shares in ISAs are legally required to be held in nominee form, not as certificates or in CREST form. :-(
Gengulphus

Just to confirm that yes, as a CREST holder, I received voting forms for the two votes. I voted against in both cases.
Mike

[Gengulphus]

If I've understood that correctly, it explains Unilever's reported statements without nominee holdings not counting and the need to rematerialize them as a certificated holding

Depending on how many there are and whether they bother to vote, that could leave the Company's fate in the hands of the certified shareholders if there are more of them than institutional holders.

That would be very worrying if it were the shareholder who was certified! ;-)

But more seriously, yes, it could leave the Company's fate in the hands of the individual shareholders who own in certificated or Crest form. Though anyone can become such a shareholder provided they're willing to pay the increased charges for dealing certificated or can find a broker willing to supply a CREST account (*). That's not restricted to current holders, by the way - anyone who feels strongly enough about the Unilever simplification and is willing to pay the price should be able to buy a small shareholding (**), get the voting forms and submit their vote to the company. I'm not too certain how much time would be needed to do that (I know certificated trades aren't fast, but my last one was getting on for 20 years ago and so not a good guide to what they're like now) but my guess is that the 27 days remaining before the votes should be enough.

So basically, it suggests the Company's fate might be in the hands of those who already own in certificated or Crest form, plus those who are willing to pay the price of joining them (and know that they can).

(*) Mine is held with Charles Stanley Direct, but they fairly seriously attempted to move me to a nominee account a year or two back (by saying that they would do so unless I told them that I wanted to keep it as a Crest account) and everything I can see on their website suggests that they're no longer offering new Crest accounts, just allowing holders of existing ones to keep them open. As the clearest example, the use of "have an existing" rather than "wish to open" in the contents list on page 2 of their [url]terms & conditions[/url] suggests strongly that they won't open new Crest accounts:

"Section A General terms (applicable to all clients)
Section B Additional terms applicable if you wish to open an ISA account
Section C Additional terms applicable if you wish to open a SIPP account
Section D Additional terms applicable if you have an existing CREST Personal Member Account
Section E Additional terms applicable if you wish to open a JISA account
Section F Additional terms applicable if you deal by telephone"

(**) The traditional size for getting shareholder rights and nothing more is 1 share, but if I were interested in doing that on more than a one-off basis, I would buy a somewhat larger holding than that - basically because single-share shareholdings are too vulnerable to corporate actions that involve share consolidations, which will turn them into no shares and a fractional entitlement payment...

Gengulphus

[Gengulphus]

That seems right to me save that I would think it would be ultra vires rather than contempt of court to count the votes in an unlawful manner.

Well, I did only give it as a "seems highly likely to me" opinion, but FWIW, I would agree with you if I'd said it about the Extraordinary General Meeting, which is a company meeting, I would agree. But for the Court Meeting, which is not a company meeting but part of the legal process by which the High Court decides whether to sanction the scheme, contempt of court seems to me to fit (though an alternative might be perjury, depending on exactly how such evidence is presented to the High Court).

Gengulphus

[absolutezero]

For years I have been banging on about nominee holdings and the loss of shareholder rights (as has ShareSoc - an organisation everyone should be a member of IMHO) and I don't have ANY nominee holdings. (Another reason to vote against as the UK shares will become broker sponsored nominee holdings.)

I'm hoping this Unilever business brings all the loss of rights of nominees into the open and we end up having this fixed.
I'm actually hoping someone sues Unilever for ignoring the nominee holders (should they do so) - but that may be difficult as the nominee 'shareholders' don't legally own any shares so may find it hard to take Unilever to court.

[Dod101]

Correct absolutezero and in addition to ShareSoc so has the UKSA. Shareholders have more or less ignored the disenfranchisement as a minor issue but hopefully this will show them the error of their thinking. I hold my Unilever in certificated form and have about 1/3rd of my holdings by number as certificates and about 25% by value, the lower yielders of course.

Dod

[Gengulphus]

For years I have been banging on about nominee holdings and the loss of shareholder rights (as has ShareSoc - an organisation everyone should be a member of IMHO) and I don't have ANY nominee holdings. (Another reason to vote against as the UK shares will become broker sponsored nominee holdings.)

So presumably all your shareholdings are outside ISAs? I think many HYPers (not all, and you may not be one of them) would find that rather expensive, and a cure worse than the disease as a result...

I'm hoping this Unilever business brings all the loss of rights of nominees into the open and we end up having this fixed.
I'm actually hoping someone sues Unilever for ignoring the nominee holders (should they do so) - but that may be difficult as the nominee 'shareholders' don't legally own any shares so may find it hard to take Unilever to court.

Even if they can take Unilever to court, I think Unilever probably have a pretty cast-iron defence, firstly that they're acting as company law requires them to, and secondly, that even if they are allowed to take nominee holders into account on the number-of-shareholders requirement and wanted to do so, they simply are not able to do so without assistance from the nominee brokers (and I can see possible reasons under data protection law why the brokers might not be willing to give it).

What is needed to solve the problem is changes to company law, not legal action against companies that seems highly likely to be futile and expensive, since the companies are almost certainly complying with the law. IIRC, the Companies Act 2006 as originally proposed did require nominee brokers and other financial providers to pass on shareholder rights to their clients to a much greater extent, but unfortunately they successfully pushed back on the grounds of the costs it would impose on them and the proposals were very considerably watered down. :-(

Gengulphus

[Arborbridge]

Back to Pyad and "zzzz...." . Folks, it just isn't worth the emotional hassle for the amount of influence one might gain.

If a share does not continue to be suitable, just sell and move on.

Arb.

[absolutezero]

So presumably all your shareholdings are outside ISAs? I think many HYPers (not all, and you may not be one of them) would find that rather expensive, and a cure worse than the disease as a result...

You are correct.
I refuse to have an ISA until and unless CREST holdings can be held inside an ISA.
Paying tax is the price I pay for
1 - having my shareholder rights and
2 - sleeping at night knowing my shares belong to me and aren't likely to end up a la Beaufort Securities.

[tjh290633]

So presumably all your shareholdings are outside ISAs? I think many HYPers (not all, and you may not be one of them) would find that rather expensive, and a cure worse than the disease as a result...

You are correct.
I refuse to have an ISA until and unless CREST holdings can be held inside an ISA.
Paying tax is the price I pay for
1 - having my shareholder rights and
2 - sleeping at night knowing my shares belong to me and aren't likely to end up a la Beaufort Securities.

I had holdings in s sponsored Crest account, which ended up with Beaufort.

TJH

[Dod101]

Certificates are the only sure way to have all shareholders' rights and the least risk but unlike absolutezero I am not prepared to pay tax on all my dividends or CGT, so I now have a 'hard core' of shares held in certificates which I am unlikely ever to sell and they are mostly lower yielders. One pays a high price to hold shares outside of an ISA.

The issue is not one which merits a zzz!

Dod

[Arborbridge]

Certificates are the only sure way to have all shareholders' rights and the least risk but unlike absolutezero I am not prepared to pay tax on all my dividends or CGT, so I now have a 'hard core' of shares held in certificates which I am unlikely ever to sell and they are mostly lower yielders. One pays a high price to hold shares outside of an ISA.

The issue is not one which merits a zzz!

Dod

"One pays a high price to hold shares outside of an ISA."

Really? What price is that? - I do not feel particularly impoverished. The chance to vote and have almost zero influence in a FTSE company? The shareholder benefits - a few Greene King vouchers which I hardly ever used anyway?
Stack that against the lower costs and convenienc of having all my shares in a nominee account, and I'll take the on-line method, thanks.

I grant you, the security issue might be valid, but I won't know until it is too late And with certificates security issues also arise, in addition to being expensive, cumbersome and slow to operate.

Arb.