Lobbying and Shareholder Rights

[UncleEbenezer]

I am being lobbied by a professional lobbying firm, hired by the directors of a company that is facing a rebellion from a group of shareholders. They urge me to vote FOR the board's AGM resolutions and AGAINST those proposed by the shareholder group, and they enclose a ready-filled form to do exactly that (with no way to enter my own choices if those happen to differ). They even supply a reply envelope.

My shares are held in a broker's nominee account, and the instructions are to my broker. Which raises a few questions:

(a) How did they get my name and address? Aren't my shares held in the name of the broker's client account? Could there be a Data Protection issue?

(b) If I were to sign and return their form, should my broker even accept it, given that the instructions aren't really from me? It seems to put them in a difficult position if they have to make a judgement whether something like that represents my wishes.

(c) Do we have any case history of how shareholders and brokers respond in practice to this kind of lobbying?

(d) Would it be possible in principle for a broker to act on its own initiative in voting Clients' shares in a contested AGM? Are there any circumstances where that might be appropriate?

[Dod101]

I have only ever been lobbied where I have held certificated shares and of course the position there is quite clear but you have a very interesting situation. How indeed did they get your info except via your broker/nominee? I think at least some of the answers you quite rightly seek may lie in the T & C's of your broker and that, it seems to me, is the first place to look. Certainly the share register is likely only to show the aggregate shares owned by the nominee (you and other underlying shareholders are of course only the beneficial owners not the legal owners).

My limited experience of this sort of thing is that it is for your broker to vote the shares they hold, hopefully, acting on the instructions of the beneficial owners, but that is where the T & Cs come in. They may also have given themselves the right to pass on details of the underlying beneficial owners, presumably for a fee!

I hope others will contribute because it seems to me that there are several important points at issue here.

Dod

[UncleEbenezer]

Thanks for the reply, Dod.

An element of the story I omitted in the interests of brevity is that in fact they've only lobbied me about part of my shareholding. Namely, my shares which I bought in the market.

I also have shares which I bought in an offer for subscription and held certificated for some time before transferring (several years ago) to the same broker account. The lobbyist hasn't included those, presumably because they haven't traced them back to me. Which tends to suggest that my broker isn't the source of their information - at least not directly/intentionally.

Also possibly relevant: this is a thinly-traded share. Could the startingpoint for tracing me be my purchase of those shares?

[edit] I just checked dates in my broker account. It seems I originally held both holdings certificated. They were all lodged into the broker account on the same date: 22/09/2014.

[UncleEbenezer]

I should add to my previous post: these are also two different share classes I hold. Both carry voting rights (as does a third share class I don't hold), and all three share classes have boxes on the lobbyist's form, but only the one box is filled with my shareholding!

[Slarti]

[edit] I just checked dates in my broker account. It seems I originally held both holdings certificated. They were all lodged into the broker account on the same date: 22/09/2014.

The register will most likely still have your details as a former shareholder and the fact that you transferred the shares to the broker account, so they are probably contacting any shares where that is the case.

Out of interest, is the voting form available to download from the company website in the investors section?

Slarti

[UncleEbenezer]

[edit] I just checked dates in my broker account. It seems I originally held both holdings certificated. They were all lodged into the broker account on the same date: 22/09/2014.

The register will most likely still have your details as a former shareholder and the fact that you transferred the shares to the broker account, so they are probably contacting any shares where that is the case.

Which still begs the question, why some but not all shares?

Out of interest, is the voting form available to download from the company website in the investors section?
Slarti

The gist of the lobbying (and the notice of AGM) is available at https://www.ventusvct.com/agm.php - though the letter goes further than the website in stressing the importance of my votes. There's a link from there to a voting form.

[dionaeamuscipula]

Companies have the right to require shareholders to give details of the underlying beneficial owners of shares held in their name

https://www.legislation.gov.uk/ukpga/20 ... ection/793

The resulting register is publicly available if it exists.

From a data protection point of view, dealing with this information would be a legitimate business activity. No need to get specific consent.

You would expect the nominee to act in accordance with your wishes, but they may reserve the right to act as they see fit, or to not act, or to not inform you of the corporate action. In my experience though, they generally won't act unless they are instructed.

Corporate actions of this sort (I know nothing of the action or the company) are relatively rare. By definition, the BoD will not want to do whatever it is that is being voted on, or there would not be a vote. IME shareholders by numbers generally support the board unless there has been massive mismanagement, perhaps slightly less so these days than previously. Some major investment houses now publish their voting records including the reasons why they voted in a particular way. However in one action I know of, the largest shareholder was in dispute with the board, one other shareholder voted with the largest in a shareholder requisition meeting, all other shareholders who voted voted with the board, however in percentage terms the largest shareholder won. Only about 75% of shareholders by number of shares voted, and 38% of them were voted against the board. Again IME, 75% is pretty typical of the maximum that will vote, even in absolutely critical circumstances.

DM

[BobbyD]

I am being lobbied by a professional lobbying firm, hired by the directors of a company that is facing a rebellion from a group of shareholders. They urge me to vote FOR the board's AGM resolutions and AGAINST those proposed by the shareholder group, and they enclose a ready-filled form to do exactly that (with no way to enter my own choices if those happen to differ). They even supply a reply envelope.

My shares are held in a broker's nominee account, and the instructions are to my broker. Which raises a few questions:

(a) How did they get my name and address? Aren't my shares held in the name of the broker's client account? Could there be a Data Protection issue?

(b) If I were to sign and return their form, should my broker even accept it, given that the instructions aren't really from me? It seems to put them in a difficult position if they have to make a judgement whether something like that represents my wishes.

(c) Do we have any case history of how shareholders and brokers respond in practice to this kind of lobbying?

(d) Would it be possible in principle for a broker to act on its own initiative in voting Clients' shares in a contested AGM? Are there any circumstances where that might be appropriate?

The company can know who the beneficial owner of nominee shares is. Are both classes of share in this company significant in terms of voting power?

I've had similar. I held shares in a company in 2 nominee accounts with different brokers, received 2 sets of paperwork etc, but only one phone call each and every time there was a vote.

I didn't bother voting as, although I held an opinion, it was never going to make a difference. As it turns out I ended up holding one percent of the non-voting shares in a FTSE250 company. The board lost the vote by a considerably larger margin.