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.
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 shareholders, who have aired their concerns, causing the company to respond in December, saying:
"We have received a number of messages from our shareholders expressing concern with respect to the current share price and requesting more information from the Company. The Board of Directors and management team recognise your concern and your desire for timely information."
Strange choice of venue
So it's perhaps a little "surprising" that Xcite has announced that its AGM will be held in Brussels on 24 May, at 9am!
Now let's be clear, the company is registered in the British Virgin Islands and this is a perfectly legal AGM location (even if it was domiciled in the UK, in fact). It could hold its AGM in Timbuktu if it chose to.
But it hardly accords well with "recognising your concerns". Xcite is listed in London on AIM and on the Canadian TSX market. But almost all the trading volume and the majority of individual shareholders are UK-based. So Brussels seems a rather odd choice of location.
Paul reckons there are 400 individual private investors currently in the share group, who now hold around 22 million shares between them; not far off 10% of the company. Understandably, he sees a moral obligation on companies registered overseas, but using London as their main listing, to make their AGMs as accessible as possible.
Time for a change
"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. "This would allow maximum access for private investors who need to organise work and travel arrangements etc.
"The question should be raised as to why the London Stock Exchange permits this to happen and doesn't ensure that all AIM-listed companies have at least one investor relations evening each year to engage with shareholders who, to a degree, fund them."
Hear, hear. We'll let you know if we get any response from the LSE or Xcite Energy.
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