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The AIC and VCTs

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BusyBumbleBee
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The AIC and VCTs

#243711

Postby BusyBumbleBee » August 12th, 2019, 11:24 am

I believe that all VCTs have signed up to the AIC code - and it is of particular relevance at this time with about 8 VCTs going through (or about to go through) large shareholder revolts.

It is worth reading and can be found here : https://www.theaic.co.uk/sites/default/ ... UL16_0.pdf

It has many lovely statements in it which seem to be overlooked by the boards:

In the preamble by the Chief Exec on page 4 it says (inter alia)
Investment companies have special factors which have an impact on their
governance arrangements. These special factors arise principally from two features.
Firstly, the customers and shareholders of an investment company are the same,
and
Accordingly, most of the AIC Code deals with matters such as board independence

On page 8
Fundamentals behind the AIC Code
Directors must put the interests of shareholders above all others.
• Directors must treat all shareholders fairly.
• Directors should be prepared to resign or take steps that could lead to a loss of office at any time in the interests of long-term shareholder value.
• Directors should ensure that they address all issues of relevance and that they disclose the outcomes of those deliberations in a way that shareholders with limited financial knowledge can understand.

On page 9
15. The board should regularly review both the performance of, and contractual arrangements with, the manager (or executives of a self-managed company).

On page 10
Shareholder communications
19. The board should regularly monitor the shareholder profile of the company and put in place a system for canvassing shareholder views and for communicating the board’s views to shareholders.

on page 13
The chairman and the other independent directors should approve the nomination for
re-election of directors and disclose the rationale in the annual report. The
deliberations over any nominee for re-election should take place in the absence of
that nominee.
on page 19
Recently, turbulent markets have served as a sharp reminder that directors can be personally liable for any errors, omissions or misleading statements in a prospectus.

Oj page 21 there is discussion on manager's fees and incentives - worth a read - indeed the whole document is worth a read before some of the upcoming AGMs

there is more detailed guidance for investment companies here https://www.theaic.co.uk/sites/default/ ... eJUL16.pdf

timbo003
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Re: The AIC and VCTs

#243879

Postby timbo003 » August 12th, 2019, 11:33 pm

Thanks BBB

That is indeed food for though and it should inspire a few questions for some of the forthcoming VCT AGMs

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Re: The AIC and VCTs

#244074

Postby Karellan » August 13th, 2019, 7:34 pm

Excellent post BBB

I shall use its content to further skewer managements when I complain about things in future.

BusyBumbleBee
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Re: The AIC and VCTs

#244075

Postby BusyBumbleBee » August 13th, 2019, 7:47 pm

Thanks, Karellan and Tim.

I wonder what an approach to the AIC on the failures of specific boards to follow the code would be? I also wonder what an approach from ShareSoc would achieve.

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Re: The AIC and VCTs

#244143

Postby barchid » August 14th, 2019, 7:45 am

BBB
I have been away for a few days and have just read your post, what an intriguing nugget of information you have brought up.
Many thanks for sharing this with us all, it makes Mr Fraser-Allen's determination to press on with this re-calibration + higher fees scheme look even more peculiar.
The AGM next week looks to be a very interesting affair !

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Re: The AIC and VCTs

#244804

Postby sinterklaas » August 16th, 2019, 2:46 pm

BusyBumbleBee wrote:of particular relevance at this time with about 8 VCTs going through (or about to go through) large shareholder revolts.


Aware of AAVC and Ventus(2) but which are the others?

BusyBumbleBee
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Re: The AIC and VCTs

#244833

Postby BusyBumbleBee » August 16th, 2019, 4:33 pm

sinterklaas wrote:Aware of AAVC and Ventus(2) but which are the others?
The other Albion VCTs

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Re: The AIC and VCTs

#244870

Postby barchid » August 16th, 2019, 6:48 pm

BBB
Indeed, CRWN are due to publish their annual accounts next month.
I read tha 2018 accounts and it appears, on page 14, that they are quite close (10%ish) to triggering their management incentive scheme.
Am I reading this correctly or is there a much larger cumulative number which I am missing? Can any Fools help please?

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Re: The AIC and VCTs

#245165

Postby Karellan » August 18th, 2019, 8:45 am

BusyBumbleBee wrote:The other Albion VCTs


I believe shareholders in Close Bros VCTs (Albion now) did well initially but I have always had returns that were more middle of the road. I do hope that they are not intending some sort of land grab on what is ours. I have been a bit shocked by the recent AAVC changes rather like when Artemis AIM did something similar but was prevented thankfully. (It went on to be a good investment).

I never quite trust any of these boards as their relationship with the manager is generally too close. My VCT holdings in total provide me with a steady stream of cash with a certain amount of capital frittering from some trusts. I would hate for it to progress towards a net negative return.

How is it BBB that you think Albion is to be watched more than most now ?

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Re: The AIC and VCTs

#245268

Postby Kidman » August 18th, 2019, 5:28 pm

BusyBumbleBee wrote:I wonder what an approach to the AIC on the failures of specific boards to follow the code would be?

I wrote to the AIC some years ago trying to enlist their support on a VCT issue but from memory they merely replied that the Code is for guidance.

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Re: The AIC and VCTs

#245301

Postby Kidman » August 18th, 2019, 8:55 pm

I have at last found the reply I received from the AIC dated 2012 Aug 03:-

I thought you would be interested to see the AIC corporate governance code and I attach a link to this document http://www.theaic.co.uk/Documents/Other ... ce2010.pdf
It is a framework for best practise of member companies. It is a principles based framework and is best practice for members to state in their report and accounts whether they are complying with the code and to explain why if they are not.

The AIC is not a regulator but is very interested in its shareholders' views and feedback on member companies. Investment company are regulated by the UKLA's listing rules and by company law.


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