Ten out of a survey of 30 brokers say they will offer nominee investors the option to opt in for full information rights when new laws come into force on 1 October. A new law, written in to the Companies Act 2006, means that companies will be obliged to send information to shareholders who ask for it, including the annual report and notice of meetings.
Not all stockbrokers will facilitate investors to opt in – there is nothing in the law forcing them to do so – but in a survey by the Association of Private Client Investment Managers and Stockbrokers (APCIMS), ten out of 30 said they will immediately do so, four said they would wait and see while 16 said they had no intention of doing so.
The Share Centre – whose chief executive Gavin Oldham has been instrumental in getting the new rights into law – will definitely be in the first wave. Andy Thompson, head of operations at APCIMS, says others planning to start on 1 October include big household names: ‘If all of those APCIMS member firms who have expressed an interest in this initiative are ready to participate from October 2007, there will be a significant group of firms offering the enfranchisement services.’
Investors who choose to hold share certificates can guarantee rights to information, but this is not an option for those wishing to capitalise on cheap internet broking. With online share dealing it is standard for the broker to pool all of its customers’ shares into one nominee account. The downside to this is that the link between the company and the investor is lost and rights are only afforded to the one name on the register, which is the broker’s.
This means the company is only obliged to send one copy of the annual report to the broker and while some brokers have arranged for companies to send them multiple copies to be forwarded, a comprehensive service on goodwill alone can’t be guaranteed. Oldham’s change to the law will re-establish the link between companies and the three million UK investors believed to hold shares in nominee-based broking accounts.
While this three million is the minority it is by far the more active group, estimated to own about 18 million shareholdings versus the 24 million holdings believed to be in the possession of the nine million UK investors opting for share certificates.
by: Simon Keane
