Cut the crap: City firms under pressure to strip out shareholder legalese
Top City firms must ditch impenetrable legalese and dense corporate-speak in their shareholder missives or amateur investors will remain shut out of the market, experts have warned.
Ministers and bosses have waged campaigns to boost engagement from retail shareholders in recent months to get idle cash flowing into the stock market and allow Brits to have a say in the direction of UK corporate growth.
The push has come amid lacklustre engagement with annual general meetings by shareholders. Figures from the UK’s second biggest retail investment platform Interactive Investor, shared with City A.M., found that 93 per cent of votes on the platform were unused this year so far.
Investment figures and communication experts have now warned the status quo will continue unless City firms strip out technical language and speak in plain English to shareholders.
“Having campaigned hard for fuller retail investor participation in our capital markets, we share investors’ frustration around the overly technical and lengthy documents that go with these deals,” James Deal, head of UK at Primarybid – which allows retail investors to participate in IPOs – told City A.M.
“Prospectuses are a prime example. Often running to hundreds of pages and full of obscure financial terms, as a platform we are required by regulation to stick almost to the letter with them.
“So there must be room for improvement and clarity of message to better engage individual investors.”
Interactive Investor this week kicked off a campaign to get listed British firms to strip out the mumbo jumbo from their corporate communication.
M&S chair Archie Norman has also launched a ‘Share Your Voice’ campaign to try and boost individual shareholders’ sway over the direction of British PLC. However, City comms aficionados said the moves would falter without more fundamental change in the language of engagement with individual shareholders.
“The investor relations sites of just about all listed corporates remain far too geared towards institutional investors,” Ed Gascoigne-Pees, a consultant at City comms firm Camarco, told City A.M.
The answer to solving a liquidity crunch for UK listed firm is to “encourage a much broader retail following”, Gascoigne-Pees added, but firms are “still stuck in technical jargon, especially for the sub-sectors which immerse themselves in acronyms”.
“There is also very little in the way of simple information that explains how the company actually makes money, the market drivers it is exposed to and its simple historical financial performance over five years,” he said.
Steven Nelson, a director at Lang Cat, which is campaigning for greater clarity on shareholder communication, said “each and every shareholder has an equal right to have their voice heard and we should be working together to ensure all potential barriers are removed”.
Eh? Morning Wire takes a trip through the dense jungle of AGM waffle
National Grid
“20. Subject to the passing of resolution 19, to authorise the Directors, in accordance with section 570 of the 2006 Act, to allot equity securities (as defined in section 560(1) of the 2006 Act) wholly for cash, including a sale of treasury shares, as if section 561 of the 2006 Act did not apply to any such allotment or sale, provided that this authority shall be limited to: (i) any such allotment or sale in connection with a pre-emptive offer; and (ii) any such allotment or sale, otherwise than pursuant to a preemptive offer, of equity securities up to an aggregate nominal amount of £22,862,246.”
Shell
That the Board be generally and unconditionally authorised, in substitution for all subsisting authorities, to allot shares in the Company, and to grant rights to subscribe for or to convert any security into shares in the Company, up to an aggregate nominal amount of €161.49 million, and to list such shares or rights on any stock exchange, such authorities to apply until the earlier of the close of business on August 22, 2024, and the end of the AGM to be held in 2024 (unless previously renewed, revoked or varied by the Company in a general meeting) but, in each case, during this period, the Company may make offers and enter into agreements which would, or might, require shares to be allotted or rights to subscribe for or to convert securities into shares to be granted after the authority ends and the Board may allot shares or grant rights to subscribe for or to convert securities into shares under any such offer or agreement as if the authority had not ended.
BAE Systems
That the authority conferred on the Directors by Article 8(B)(i) of the Company’s Articles of Association be renewed for the period ending at the conclusion of the Company’s Annual General Meeting in 2024 or at the close of business on 30 June 2024, whichever is the earlier, and for such period the Section 551 Amount shall be £25,461,446. The authorities in this Resolution apply in substitution for all previous authorities pursuant to Section 551 of the 2006 Act. To consider, and if thought fit, to pass the following Resolutions 23 to 25 which will be proposed as SPECIAL RESOLUTIONS
Glencore
To renew the authority conferred on the Directors pursuant to Article 10.2 of the Company’s Articles of Association (the Articles) to allot Shares or grant rights to subscribe for or to convert any security into Shares for an Allotment Period (as defined in the Articles) commencing on the date of the passing of this resolution and ending on the earlier of 30 June 2024 and the conclusion of the Company’s Annual General Meeting in 2024, and for that purpose the Authorised Allotment Amount (as defined in the Articles) shall be US$41,848,471