RBS investors in push for corporate governance reform

● AGM resolution requisitioned for new ‘shareholder committee’ at lender

About 160 investors have urged Royal Bank of Scotland to bolster its corporate governance by installing a new “Shareholder Committee” to avoid any rerun of the bank’s near-implosion in 2008.

Sharesoc (the UK Individual Shareholders Society) and the UK Shareholders Association (UKSA), Britain’s biggest groups representing retail investors, have requisitioned a resolution for RBS to set up the committee that will go to the next AGM in May 2017.

The groups said yesterday that they will be “delivering the resolution and a large bundle of associated requisition forms to RBS’S London offices” today.

Mark Northway, Sharesoc’s chairman, said: “One objective is to stop the events that took place at RBS from ever happening again.

“A dominant CEO, concealing the true financial position of the company from investors, proceeding with a reckless acquisition, and then publishing a rights prospectus which concealed the problems faced by the company. These are not examples of good governance.”

The move comes as RBS is still facing legal actions in 2017 from the RBOS Shareholder Action Group and the RBS Rights Issue Action Group alleging the bank’s prospectus for its rescue £12 billion rights issue in 2008 misled investors as to the financial strength of the bank.

It later made a record £24bn loss for that year and tumbled into majority taxpayer control, with the lossmaking bank still 72 per cent owned by the state.

Northway said that shareholders, including individual investors “deserve a new approach, one with greater involvement and more effective input from them as ultimate owners”.

John Hunter, chairman of UKSA, said: “Most large shareholders are intermediaries who tend to act in their own interests and not those of the ultimate beneficial owners (ie. the people they represent).

“This needs to change and this proposal is a step towards that. Transparency and formal engagement will help to prevent poor stewardship.”

RBS’S share price closed last night down 1.6p at 223.7p, compared with a taxpayer buy-in price of up to £5. Sharesoc and UKSA’S shareholder committee proposal was developed with Gavin Palmer, an outspoken RBS shareholder who interrupted the bank’s AGM in 2013 to hand out a petition calling for a committee on the board.

Business Secretary Greg Clark announced a new package of corporate governance reforms in November which could require firms to provide seats for workers on company boards. RBS must now decide whether the proposal meets the correct requirements to face a vote at its AGM on 4 May. An RBS spokesman said: “We have not yet received the final draft resolution.

“Once it has been delivered we will look closely to ensure that it complies with all corporate governance and listing lines.”