The Lemon Fool

Thanks, GS.

In the other place I seem to have acquired the sobriquet of 'our smug friend'!

ChrisNix wrote:Thanks, GS.

In the other place I seem to have acquired the sobriquet of 'our smug friend'!

Wear it with pride Chris. You're in good company


GS

One or two though who seem to like the rationalist approach!

Chris,

Recently in the other place you wrote:

https://www.fixedincomeinvestments.co.u ... #post-3154
The only way out I have seen any mention of would be if the issuing documents stated, in conflict with the articles, that on a capital return the prefs got more than par. I’ve not seen any that do, although NWBD has a protection which was not mentioned in the listing particulars?!

I agree that the class vote protection is not mentioned in the NWBD listing particulars, but neither are a lot of other details. It should be noted that the listing particulars don't purport to be, or even contain a copy of, the terms; rather, they refer specifically to the Articles and Authorising Resolutions as containing the terms (as required by the Companies Act 2006 of course):

The terms of, and the rights attaching to, the Sterling Preference Shares are contained in the Bank's Articles of Association (the "Articles") and in resolutions of a duly constituted Committee of the Board of Directors of the Bank to be passed on 17 September 1991 (together, the "Terms of Issue").

Apart from the above specific statement, the listing particulars repeatedly refer to the Articles for further details of features of the shares.

I think there is a danger that retail investors assume that preference shares are equivalent to bonds: that they are fully described by a neat legal contract, but this is not the case. First they are not a neat stand-alone asset separate from the capital of the company but are an integral part of the share capital of the company, having interdependancies with other parts of the capital, having some rights in common with all other classes and having other rights unique to the class alone. These rights are fully described in a combination of the Articles and Companies Acts, but also, crucially, the resolutions of the company, because the shareholders themselves can resolve to alter the company's capital structure.

It's a serious error for investors to assume the listing particulars fully describe preference shares (especially for older issues); my suggestion to investors is not to bother with the listing particulars but to go straight to the company's articles and the Companies Acts.


GS

GoSeigen wrote:It's a serious error for investors to assume the listing particulars fully describe preference shares (especially for older issues); my suggestion to investors is not to bother with the listing particulars but to go straight to the company's articles and the Companies Acts.

However the directors are presumably responsible for discrepancies between the various documents so, in practice, the hierarchy may not be as clear as you suggest.

stockton wrote:

GoSeigen wrote:It's a serious error for investors to assume the listing particulars fully describe preference shares (especially for older issues); my suggestion to investors is not to bother with the listing particulars but to go straight to the company's articles and the Companies Acts.

However the directors are presumably responsible for discrepancies between the various documents so, in practice, the hierarchy may not be as clear as you suggest.

GoSeigen's statement is typical of his whole attitude to this matter, why shouldn't the listing particulars fully describe the Irredeemable Preference Shares, after all, their concept is hardly that complicated.

Owen.

I have purchased Cumulative Irredeemable Preference Shares on the understanding that they were both Cumulative and Irredeemable.

I am expecting GoSeigen to tell me any day soon that, not only are they not Irredeemable, but that they are also not Cumulative either!

Go on Chris, break my heart, you can do it with your superhuman powers of reasoning.

Owen.

[Also, I expect that the dividend rate can be changed at any time too ]

OwenSwansea wrote:
GoSeigen's statement is typical of his whole attitude to this matter, why shouldn't the listing particulars fully describe the Irredeemable Preference Shares, after all, their concept is hardly that complicated.

Owen.

They either do or they don't fully describe them -- there is no "should" about it. Anyone may read them and compare to the Articles.


Chris

Chris,

I still see no reason why the listing particulars should not fully describe the Irredeemable Preference Shares, and if they do not, the directors are guilty of negligence/fraud.

Owen.

They either do or they don't fully describe them -- there is no "should" about it.

Yes they absolutely should describe them to prevent any misunderstandings or confusion. I think GoSeigen's attitude is daft.

OwenSwansea wrote:Chris,

I still see no reason why the listing particulars should not fully describe the Irredeemable Preference Shares, and if they do not, the directors are guilty of negligence/fraud.

Owen.

I’m talking about fact, others about their own desires. I can only suggest you sue them if you believe it’s fraud or negligence. Personally I doubt OwenSwansea or colin have even bothered comparing the documents before calling those who have daft.

GS

P. S. How are you getting along with suing Lloyds for their ECN prospectus mistake?

Chris,

It's a low blow to mention the Lloyds ECNs, and not worthy of you. you know how sensitive I still am about this matter. In any case, we only lost by the smallest of margins.
By the way, how are your Carpetright shares doing. They were a good by weren't they?

Owen.

GoSeigen wrote:Chris,

Recently in the other place you wrote:

https://www.fixedincomeinvestments.co.u ... #post-3154
The only way out I have seen any mention of would be if the issuing documents stated, in conflict with the articles, that on a capital return the prefs got more than par. I’ve not seen any that do, although NWBD has a protection which was not mentioned in the listing particulars?!

I agree that the class vote protection is not mentioned in the NWBD listing particulars, but neither are a lot of other details. It should be noted that the listing particulars don't purport to be, or even contain a copy of, the terms; rather, they refer specifically to the Articles and Authorising Resolutions as containing the terms (as required by the Companies Act 2006 of course):

The terms of, and the rights attaching to, the Sterling Preference Shares are contained in the Bank's Articles of Association (the "Articles") and in resolutions of a duly constituted Committee of the Board of Directors of the Bank to be passed on 17 September 1991 (together, the "Terms of Issue").

Apart from the above specific statement, the listing particulars repeatedly refer to the Articles for further details of features of the shares.

I think there is a danger that retail investors assume that preference shares are equivalent to bonds: that they are fully described by a neat legal contract, but this is not the case. First they are not a neat stand-alone asset separate from the capital of the company but are an integral part of the share capital of the company, having interdependancies with other parts of the capital, having some rights in common with all other classes and having other rights unique to the class alone. These rights are fully described in a combination of the Articles and Companies Acts, but also, crucially, the resolutions of the company, because the shareholders themselves can resolve to alter the company's capital structure.

It's a serious error for investors to assume the listing particulars fully describe preference shares (especially for older issues); my suggestion to investors is not to bother with the listing particulars but to go straight to the company's articles and the Companies Acts.


GS

GS,

Hello from darkest Grosmont!

I concur that issuing documents merely summarise the terms of a pref, as set out in the articles, and qualified as necessary by the directors' resolution authorising said issue.

That said, I am surprised that the NWBD listing dox neglected to mention the class meeting protection, because it is unusual. Nothing turns on that, though.

You are quite right to warn private investors against relying on the issuing documents as their main source. These are summaries, although ORIGINAL (only) subscribers might be able to sue alleging that that they invested in reliance.

In a nutshell: read the articles!!

Chris

GoSeigen

your position seems to be based on the belief that common sense in this matter is irrelevant, if that is not the definition of daft i don't know what is,
but that does not mean you are not right, in a crazy world one can be both daft and right at the same time. But lets hope for not too much longer.
But thank you for pointing out that sometimes the language we are exposed to can be somewhat disingenuous.
The writing of Douglas Addams comes to mind.

There’s no point acting all surprised about it. All the planning charts and demolition orders have been on display in your local planning
department in Alpha Centauri for fifty of your Earth years, so you’ve had plenty of time to lodge any formal complaint and it’s far too late to start
making a fuss about it now.’