ShareSoc has launched an e-petition to gather support for proper representation of the many individual shareholders whose holdings are held in nominee accounts. All ISA shareholdings have to be held in nominee accounts. Most brokers make it difficult or impossible for shareholders with their holdings in nominee accounts to obtain their rights to:
a) Receive shareholder communications from the companies they own shares in
b) Attend company meetings
c) Vote on resolutions the company proposes, including election of directors, directors' remuneration and diltuive share issues.
Moreover, when there is a disagreement between a company's management and its shareholders, nominee accounts pose a barrier to shareholders taking collective action. Without the ability to contact the beneficial owners of shares, it is extremely difficult for a group of shareholders that has a legitimate grievance to contact others, put their side of the case, and get the votes of those in support. This is well illustrated by the case of Healthcare Locums (LON:HLO) , where individual shareholders have ended up being massively diluted and management and certain hedge funds are likely to benefit at those individual shareholders' expense. You can read all about the case of HLO on ShareSoc's member network, including a detailed report on yesterday's meeting. If you're not already a member, you will need to join us to be granted access to the member network.
Please sign the petition here. The text of the e-petition is as follows:
Restore Shareholder Democracy by Ensuring Nominee Account Shareholders are on Share Registers by Default
Responsible department: Department for Business, Innovation and Skills
Private shareholders represent more than 10% of the shares held in publicly listed companies. They typically do not receive information, do not vote, and cannot attend general meetings of the companies they own because they are now mainly in nominee accounts. Unfortunately many stockbrokers do not, and will not, enfranchise their nominee clients. The reforms in the 2006 Companies Act did not solve this problem. The alternative of an electronic replacement for share certificates was killed off by vested interests. We need a proper system to ensure that all beneficial owners who hold their shares in nominee accounts are treated in the same way as those on the share register. Indeed they should be on the share register with the ability to opt out of company or third…
