Should the LSE act to force companies to be more accessible to private investors?
"The course of true love never did run smooth" as Shakespeare said. And if ever there was a relationship designed to test patience on both sides of the fence, it's that between listed companies and private investors.
Now as a private investor myself, you may expect me to be less than objective in my views. But I'm not … honest! But to say some companies stretch our loyalty would be putting it mildly.
There are so many examples from stock market history of companies trampling over the interest of the small private investor that it's a wonder any of us persist. From non-participation in discounted fundraisings to sudden de-listings or downright fraud, we get regularly abused. But when they want our capital, well, they want us.
Not all companies are like this. Most are either satisfactory or better. And a few really are great at sharing information with us within the bounds of legality.
Two-way street
It's a two-way street. From the companies' side, you can understand that it's difficult to concentrate on business whilst keeping everyone well informed. And we private investors can be a flighty bunch, with relatively small amounts invested, who will leave at the drop of a hat should another temptress turn our heads.
So when you read of a relationship running really well on both sides, it warms the cockles of your heart. And such was the case when I wrote about the creative communication efforts organised by private investor Paul Rutherford with New World Oil & Gas (LSE: NEW) in December. The company is drilling for oil in Belize and appears to have welcomed Paul's and ishareinfo.tv 's involvement and communication to fellow private investors. Paul has also recently worked with Strategic Natural Resources (LSE: SNRP) to run an investor relations evening.
Previously, Paul had organised a strong and substantial private investor base to engage positively with the management at Xcite Energy (LSE: XEL). He met with the company last year and has established a relationship with the company since.
The North Sea-focussed oil exploration company announced its final results for 2011 last week. And the last 12 months hasn't been a happy one, share price-wise, after a meteoric rise in the second half of 2010. The fall has caused some angst amongst…
....mmmmm.......
...from where I sit the answer is "yes and no".
On the one hand, you point out that:
From the companies' side, you can understand that it's difficult to concentrate on business whilst keeping everyone well informed.
This is indeed an important point, and one that shareholders would do very well to remember before pestering company managements for news updates that they know perfectly well the company would be unable to respond to without informing everyone via an RNS.
I would also add that there are very often circumstances where it is in the interests of shareholders themselves fo there to be no public knowledge or discussion. This includes matters in relation to potential corporate deals but isn't limited to such things.
On the other hand, this suggestion seems eminently reasonable:
"Companies who are registered overseas should run an investor relations evening once a year which will not be bound by the overseas rule, and which will allow many more shareholders to meet with management," he says.
If companies are going to benefit from having a UK listing then there should be a quid pro quo.
The Irish company of which I am a director has a policy of alternating the location of its AGM between Dublin and London - and even when the AGM is in Dublin there is usually an investor presentation in London too.
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