Give nominee shareholders equal rights, says WMA

Chris Hamblin

27 March 2015

Under the Companies Act 2006, nominee shareholders are not automatically entitled to receive information relating to the companies in which they have invested nor to attend or vote at relevant general meetings. Some firms do offer such a service but it is not widespread. Any automatic right to 'opt in' should not have to apply to people who hold their portfolios with discretionary investment managers as it is the investment manager who has been given full discretion to manage that account in accordance with the relevant mandate.

The Department of Business, Innovation & Skills is pondering how best to react to the Kay Review, one of whose recommendations is for HM Government to explore the most cost-effective means for high-net-worth investors to hold shares directly on an electronic share register. Professor Kay expressed concerns that the electronic intermediated shareholding model creates barriers to something he calls 'engagement' and makes investors 'uncertain.' The WMA thinks that an automatic right to 'opt in' for shareholders will go a long way towards meeting Prof Kay’s concerns.