the UK Individual Shareholder Society, or ‘ShareSoc’, which aims
to empower individuals against intimidating Boards. The recently
created internet start-up ‘Moxy Vote’, a service which optimises
shareholder activism by making it easy to vote, is proving to be a
hit with investors. A notable victory was their success in blocking
Google’s acquisition of On2 Technologies. This occurred when
On2’s investors were angered by the director’s acceptance of
what they perceived to be too low an offer.
However, ShareSoc has 2,500 members and whilst it’s involved in an impressive array of activities – such as blocking Premier Oil’s £4m CEO pay package – its contribution is relatively
minor when compared to similar Continental Europe organisations like Swedish Shareholder Association (70,000 members) or
Deutsche Schutzvereinigung für Wertpapierbesitz (25,000 members). The chairman of ShareSoc, Roger Lawson, suggested in
his interview with The Independent that a key issue is the lack of
a complaint culture in the UK and the perception that to challenge directors would be ‘bad form’.
The City legal sector should take advantage. Impoverished
individual investors and their ‘societies’ may not seem like a lucrative market right now, but it’s a matter of time before a British
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Carl Icahn emerges, with plenty of cash to spend on making sure
his campaign is successful. This has been evidenced by the recent ICAEW report on shareholder activism in the UK and the
relative publicity it claimed, notably in Linklaters’ UK Corporate
Update newsletter.
Besides, where there is no money, there is reputation. Pro
bono aid of an activist foundation investing in Coca Cola to try
and get it to stop buying their water from Africa would generate
much needed kudos for the City law firms. Not to mention that
getting involved does not necessarily mean helping the activists:
I’m sure the boards would be inclined to turn to the legal sector
for some help in seeing off these pesky proxies challenging their
bonuses.
Activist practice shouldn’t be just about providing a supply
to the demand though. It’s not about which side is in the right. At
the end of the day, it’s about levelling the playing field, and ensuring the fight is fair, or at the very least, legal. That’s what we do.
Jan is a second-year LLB Law student, the President of the Freedom
Society 2013/14 and the Third Year Representative for the UBLC
2013/14. He writes about the things he reads, for others to write about.