HYP Utility Holdings and Nationalisation Difficulties

[OLTB]

Evening all - I was listening to the radio this morning and heard a solicitor discussing the nationalisation of utilities should the policies of the current Labour Party be brought into action. The legal firm he works for has produced a report on such action and it was very interesting to listen to and should be available on the Best of Today podcast if anyone wants to listen (Monday's business with Dominic O'Connell). I don't work for the BBC podcast marketing department by the way...

In a nutshell, the solicitor was saying that it would not only be the shares that would need to be nationalised, but also the bond holders and all other outstanding debt. It was also his suggestion that this sort of policy would be difficult to get through the two houses of parliament.

One major point was the fair value of the business linked to foreign shareholders and investors. I wasn't aware, but there is a global treaty that protects shareholders of foreign businesses being nationalised. This treaty was brought in to help against nationalisation by emerging countries but also is effective in the UK. The example he gave was of an investor in Hong Kong holding shares in a utility business (say NG.) and this being nationalised. The government couldn't set the price of the shares, or purposely drive the value down to reduce compensation for shareholders as this would be down to the market and if the government tried to force down the value then the foreign investors would be able to sue using this treaty. One important issue is that the treaty only applies to foreign investors so us UK based investors couldn't claim against a potentially driven down share price. The solicitor did say, however, that UK shareholders could claim against such an event using the Human Rights Act.

Interestingly, the solicitor also alluded to the fact that the company he worked for (unfortunately can't remember which one) had been consulted by investors recently over such nationalisation issues which is why they had produced the report that was being discussed.

I'm a little less worried now about my utility HYP holdings - if there are significant foreign investors in the utility company shares many of us hold (perhaps foreign pension funds?) I'm sure there would be challenges if the nationalisation programme were ever to go ahead.

Cheers, OLTB.

[Raptor]

Moderator Message:
Have removed posts that do not follow the guidelines for this forum. I have moved a similar post recently as it was more relevant to the "General" forum. I will leave this here but can posters keep to HY posts, any that are not in keeping with guidelines will be removed. If you wish to post on the subject other than HY then please post on the other thread. Raptor.

[arty]

It's based on a report by Clifford Chance - a quick google of "Clifford Chance nationalisation" should bring up the report.

[Alaric]

If you wish to post on the subject other than HY then please post on the other thread. Raptor.

Which is ?

[Raptor]

If you wish to post on the subject other than HY then please post on the other thread. Raptor.

Which is ?

Here you are.

viewtopic.php?f=16&t=10388

Raptor