Death of shareholder democracy
Posted: December 17th, 2021, 2:41 pm
So you thought when you bought a share, that every year you would have a chance to hold the directors to account at an AGM for the year gone by and vote on resolutions including the reappointment of directors. Those of you who delved a bit deeper might have thought that Companies Act 2006 gave you protection by requiring a listed company to hold an AGM within 6 months of its year end.
WRONG & WRONG
The scumbags at Edge Performance VCT (EPVCT) with 2 share classes have found a way to bypass all this generally accepted corporate governance stuff.
How is this done? Here is the template.
1) First you get your accounts out so late that the accounts are not in shareholder hands in time for the legal AGM to be properly held.
2) You announce that the adjourned AGM will be held as soon as possible but then take no action.
3) You sell H class investments at a profit to create distributable reserves and use them to buy out the I class shares and wind up the I class before they can vote on the prior year's activities (and, by the way, don't pay H class shares any dividends from the profits).
4) Well done, you have just disenfranchised 73m I class shares (85% of all shareholders) whose net assets halved in the prior year under your stewardship. You will now never have to be accountable to them for your governance.
AHA, but surely shareholders have another remedy under CA2006, by calling for an EGM with the support of 5% of shareholders.
YES & NO
EPVCT announced in an RNS that such a GM had been properly called but before holding the meeting it used the conversion rights under its Articles to remove the I Class from existence and thus frustrate the purpose and voting power of the GM.
These director paragons of corporate governance are Sir Peter Bazalgette (ITV), Sir Aubrey Brocklebank (Downing Four VCT) and Terry Back (Acamar Films EIS).
Where was the regulator, FCA, during these shenanigans? Sadly sitting on the side-lines (despite regular updating) and feeling they had no powers to intervene.
The last chance saloon is now at the over 4 month delayed AGM and at two(!) GMs on 17 January 2022. Hopefully the rump H class will vote to remove the directors and wind the whole omnishambles up.
If you have these shares, please assert your shareholder democratic rights by using them.
WRONG & WRONG
The scumbags at Edge Performance VCT (EPVCT) with 2 share classes have found a way to bypass all this generally accepted corporate governance stuff.
How is this done? Here is the template.
1) First you get your accounts out so late that the accounts are not in shareholder hands in time for the legal AGM to be properly held.
2) You announce that the adjourned AGM will be held as soon as possible but then take no action.
3) You sell H class investments at a profit to create distributable reserves and use them to buy out the I class shares and wind up the I class before they can vote on the prior year's activities (and, by the way, don't pay H class shares any dividends from the profits).
4) Well done, you have just disenfranchised 73m I class shares (85% of all shareholders) whose net assets halved in the prior year under your stewardship. You will now never have to be accountable to them for your governance.
AHA, but surely shareholders have another remedy under CA2006, by calling for an EGM with the support of 5% of shareholders.
YES & NO
EPVCT announced in an RNS that such a GM had been properly called but before holding the meeting it used the conversion rights under its Articles to remove the I Class from existence and thus frustrate the purpose and voting power of the GM.
These director paragons of corporate governance are Sir Peter Bazalgette (ITV), Sir Aubrey Brocklebank (Downing Four VCT) and Terry Back (Acamar Films EIS).
Where was the regulator, FCA, during these shenanigans? Sadly sitting on the side-lines (despite regular updating) and feeling they had no powers to intervene.
The last chance saloon is now at the over 4 month delayed AGM and at two(!) GMs on 17 January 2022. Hopefully the rump H class will vote to remove the directors and wind the whole omnishambles up.
If you have these shares, please assert your shareholder democratic rights by using them.