THE GREAT UNILEVER INVESTOR STITCH-UP

Small shareholders risk being silenced because of voting rules

THOUSANDS of ordinary shareholders are being denied full voting rights in Unilever’s battle to abandon the UK.

Investors face a crunch vote on whether it should ditch its British legal headquarters and base itself in the Netherlands alone.

In what is expected to be a knifeedge decision, Unilever – which produces dozens of households name brands, such as Marmite and PG Tips – needs the owners of 75pc of shares listed in London to back the move. But it also needs a majority of voting shareholders to approve. This means, in theory, the opinion of an investor with just one share counts for as much as that of an institution such as a pension fund with billions of pounds of stock.

But many savers with cash in Unilever hold their shares in so-called nominee accounts through brokers, rather than owning them outright.

Unilever has said that giant brokers such as Hargreaves Lansdown will only count as a single shareholder when the votes are counted, even though they look after the stakes of huge numbers of people through nominee accounts.

Hargreaves alone has 20,000 Unilever investors on its books – enough to swing the vote – but this will be ignored when the tally is counted.

Gavin Oldham, chairman of fellow broker The Share Centre, has written to Business Secretary Greg Clark to complain about Unilever’s treatment of ordinary investors.

Oldham said: ‘It is unacceptable. Time is of the essence, as a large number of nominee shareowners are already casting their vote. We will continue to work with other interested parties to ensure that Unilever recognise the very large numbers of personal investors taking an active interest in the future of their company.’

The only way for a nominee shareholder to be counted as an individual voter is to apply for a paper share certificate, a long process which involves paperwork and is expensive.

Unilever says on its website: ‘PLC shareholders who hold all their shares through a broker or other nominee arrangement will not be directly counted towards the majority in the number test.’

Oldham has urged Clark to intervene. He warns that laws introduced in 2006 require listed firms to recognise individual shareholders who own stock through a nominee account.

Oldham says the situation at Unilever would ‘ deny members who hold their shares through nominees their entitlement to exercise a shareholder right’.

He writes: ‘ Time is of the essence if we are to avoid the interest of nominee shareholders of Unilever being frustrated.’

However, a Business Department spokesman said that the issue is deemed to be a commercial matter and so it would not be commenting. Unilever must also win support from investors who collectively own 75pc of its London-listed stock. The votes of investors who hold shares through a nominee account will still count towards this total, meaning there is still a reason for them to vote. Some of the City’s biggest names are opposed to Unilever moving. Columbia Threadneedle, Lindsell Train, Aviva Investors and M&G Investments have expressed concerns.

Unilever said: ‘Under English company law the person entitled to vote is the member on the register, which may be a single nominee holding on behalf of multiple investors. We would encourage all of our shareholders to vote on our proposals for simplification, which we believe bring clear benefits for all shareholders.

‘Those holding through nominee or broker arrangements should contact their nominee or broker directly for further advice.’