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The Daily Telegraph - Your Money - - FRONT PAGE -

ctivist” pro­fes­sional in­vestors take sig­nif­i­cant stakes in firms and use their po­si­tion to pres­surise com­pa­nies into mak­ing changes, but share­hold­ers don’t need bil­lions at their dis­posal to push for a shake-up.

Re­cent years have seen more of this kind of ac­tivism in Bri­tain, as in­vestors have flooded in from Amer­ica, and the meth­ods they use have be­come in­creas­ingly so­phis­ti­cated.

At any one time, a num­ber of com­pa­nies are likely to be in ac­tivists’ sights.

Right now, both Bar­clays and BHP Bil­li­ton, the min­ing gi­ant, are in show­downs with dif­fer­ent ac­tivists who have bought around 5pc of the shares and are gain­ing sup­port to push for sig­nif­i­cant change. Royal Dutch Shell has faced re­peated share­holder re­volts over ex­ec­u­tive pay.

Here, Tele­graph Money ex­plains the ways in which in­di­vid­ual in­vestors can ex­er­cise their rights as share­hold­ers and carry out their own form of ac­tivism.

James Con­ning­ton

Share­hold­ers have the right to at­tend, and ask ques­tions at, any for­mal meet­ing (such as an an­nual or ex­tra­or­di­nary meet­ing) and to vote on any de­ci­sions that are put to them.

Adrienne Mon­ley, Euro­pean head of in­vest­ment stew­ard­ship for fund gi­ant Van­guard, said: “Votes tend to fol­low com­mon themes, such as board of di­rec­tor elec­tions, ap­prov­ing au­dit re­ports, ex­ec­u­tive pay, and some­times is­sues put on the bal­lot by sig­nif­i­cant share­hold­ers such as ask­ing for in­creased dis­clo­sures or greater board di­ver­sity. The busi­ness strat­egy of a firm is not some­thing put to a vote.”

Al­though an in­di­vid­ual’s vot­ing power is dwarfed by that of large in­sti­tu­tions, there is still po­ten­tial to ap­ply pres­sure. In par­tic­u­lar, in­di­vid­ual in­vestors who are also cus­tomers of a busi­ness can have greater im­pact.

Richard Stone, chief ex­ec­u­tive of the Share Cen­tre, an in­vest­ment shop, said: “What re­tail in­vestors have to their ad­van­tage is their num­ber rather than the num­ber of shares. Some com­pa­nies will look at how many peo­ple vote in­stead of the num­ber of votes. For in­stance, if three big in­sti­tu­tions vote for some­thing but ev­ery small share­holder is against it, that could make a company lis­ten.”

An­nual meet­ings in par­tic­u­lar are an op­por­tu­nity for small share­hold­ers. “If 10,000 peo­ple turned up at a Sains­bury’s AGM they would clearly make their pres­ence felt, make a news story and put pres­sure on the company’s board,” said Mr Stone. Most in­vestors now own shares via an on­line in­vest­ment shop, but not all of these ser­vices al­low share­hold­ers to ex­er­cise their rights.

This is be­cause such in­vest­ments are held on a “nom­i­nee” ba­sis – the in­vest­ment shop it­self is the share­holder.

The Com­pa­nies Act of 2006 ex­tended the full rights of share­hold­ers to nom­i­nee share­hold­ers, but it is up to in­vest­ment shops to de­cide whether to fa­cil­i­tate this. Some don’t, so in­vestors should choose care­fully.

“It’s not that dif­fi­cult to do. We ex­change in­for­ma­tion on a monthly ba­sis with the share regis­trar, so our cus­tomers are treated as if they were a name on the reg­is­ter,” said Mr Stone.

Cus­tomers of Hargreaves Lans­down, Bri­tain’s big­gest in­vest­ment shop, can re­quest to at­tend a meet­ing and vote, or can send a vot­ing in­struc­tion by email or post. In­ter­ac­tive In­vestor al­lows in­vestors to opt in free of charge to re­ceive all share­holder ma­te­ri­als and to vote, while cus­tomers of AJ Bell and Bar­clays Smart In­vestor can ask for the right to vote or at­tend meet­ings. Some in­vest­ment shops may charge for such ser­vices, and the dead­lines for mak­ing a re­quest are likely to be in ad­vance of any meet­ing or vote.

With fund in­vest­ments, it is up to the fund’s man­ager how he or she wishes to vote on is­sues at any of its hold­ings.

You can still con­tact the fund man­age­ment company and voice your opin­ions; some will be bet­ter at tak­ing them into ac­count than oth­ers. Many fund houses pub­lish in­for­ma­tion on­line about their vot­ing ac­tiv­ity at the com­pa­nies they in­vest in.

Some go a step fur­ther and pro­vide de­tailed in­for­ma­tion on their vot­ing poli­cies. Van­guard, for in­stance, ex­plains how it makes vot­ing de­ci­sions and with what aims in mind.

For par­tic­u­larly keen in­vestors, there are or­gan­i­sa­tions that rep­re­sent in­di­vid­ual pri­vate share­hold­ers. The UK Share­hold­ers’ As­so­ci­a­tion and ShareSoc speak for in­di­vid­ual share­hold­ers, mount cam­paigns, talk to reg­u­la­tors and launch ac­tion groups.

BHP Bil­li­ton, the min­ing group, is among the com­pa­nies to be tar­geted by activist in­vestors

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