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 Shareholder Democracy, Shareholder Action...
AGM REFORM AND THE DEATH OF SHAREHOLDER DEMOCRACY
In the 1 980s Bntain was exposed to Mrs Thatcher's new vision of democracy - a shareholder democracy where ordinary people could buy shares, attend AGMs, and have their say in the running of the omnipresent corporations. In the 1 990s many concerned people have taken that vision and put it into practice. The results have perhaps not been quite what Thatcher intended.
A company's AGM is the one occasion of the year when the board of directors opens itself to public questioning. However, rumours are now circulating that certain large corporations, unused to the strength of feeling displayed at their AGMs, are now lobbying government to subvert our Maggie's noble dream. Allegedly, they want the laws changed to allow only those who can afford to invest considerable sums to attend. Paul Deluce investigated...
Speculation that the future of shareholder activism could be under threat, has been rampant this summer, following persistent reports that a number of companies are campaigning to prevent small investors from attending future AGMs. By a strange coincidence, the Department of Trade and Industry have been engaged in confidential talks with "a number of large companies" throughout the summer, debating the issues contained in a consultation document entitled, Company law reform - Shareholder communications at the annual general meeting. So, what's the story?
One company which has clearly tired of debating the issues with its more ethically concemed investors is the much loved and widely respected SHELL.
In an article published by the Financial Times in May, journalist William Lewis interviewed Ms Jyoti Munsiff, the company secretary of Shell Transport and Trading plc, the UK arm of the Royal Dutch Shell Group.
Ms Munsiff, according to the FT, wants to see the law changed so that individuals may only attend a company's AGM if they have been shareholders for a specified minimum period ea. 12 months. "I also believe that the investment should be of an amount which evidences serious interest in the company," she went us "Ms Munsiff is on holiday for two weeks". He added that the FTarticle was "wholly innacurate", and that Ms If you care, buy a s/'are, If no~, buy a lot FJumbe~ of s1~~~¢ own.& on, "something like £1000." Companies are currently able to alter their own rules, with the permission of the shareholders, to clamp down on activists at annual meetings, but Ms. Munsiff feels that "it needs to be treated as a wider issue of law. I am very much more in favour of the law being ammended in some way to eradicate what is a serious problem."
We phoned Shell in August, to find out more. We spoke to Mr Gordon West, the assistant company secretary, who told us Ms Munsiff is on holiday for two weeks. He added that the FT article was wholly innacurate, and that Ms Munsiff had been "mis-quoted". He denied that Shell was seeking to prevent single shareholders from attending the company's AGMs. How was Ms Munsiff "mis-quoted"? In what way was the FT article "wholly inaccurate"? Mr West was unable to comment. "You will have to speak to Ms Munsiff.'he said. We phoned again at the beginning of October. Several times. Ms Munsiffwas still unavailable. Eventually we received a call from Shell's press off~ce and told, "you cannot have an interview with the company secretary". Why? "Look, you are not in a position to demand an interview you don't have a story", responded the press of fice. We have also been denied an interview with Christopher Fay, the company chaimman, and with any other of the directors. Why? The DTI have been equally forthcoming. We also phoned them in August. "it would be inapropriate to discuss these issues at this time", a spokesperson said. "What companies have taken part in the consultation?" we asked. "That is confidential". "When will proposals be sent to ministers?". "We really couldn't say". Really?
We also contacted LLOYDS/TSB, MIDLAND/ HSBC, and COSTAIN, all of whom haveexperienced small investors making a fuss at their AGMs. All these companies stated that they have not taken part in the DTI consultation, that they are not campaigning to restrict single shareholders from attending the AGMs, and that all shareholders are enti- tled to ask questions at the AGM. Exactly what Shell's press office told us last week.
REFERENCES
'Shell seeks to curb AGM hijackers'. The Financial Times, p9, 8/5/96 Company law reform - Shareholder communications at the ACM. A consultative document. DTI, published April 96.
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AGM Protest - A year of poignant pranks
For almost thirty years protesters have used single shares to attend, influence and often dominate Annual General Meetings of "disreputable companies". Campaigners can raise important issues, inform other shareholders of less publicised information and attract media attention.
Over the last year this exercise of democracy has flourished. The Lloyds Bank EGM (27/11/95) was organised to facilitate their merger with TSB. Campaigners from Lloyds and Midlands Boycon (LAMB) quizzed the chairman, Sir Robin Ibbs, on Lloyds' relationship with Shell. After an hour of sharp questions, security moved in and chaos erupted with alarms and stinkbombs. A pink panther entertained the meeting while other protesters stripped off to reveal the naked truth about Lloyds ethical responsibility.
LAMB wanted "to raise the consciousness of the shareholders" and at the Midland Bank AGM (3115196) they demonstrated the farcical nature of such AGMs. A pantomime dame questioned the directors while other campaigners organised a multiple choice quiz on Midland financing arms to Iraq, Turkey and other harsh regimes. Again the meeting fell apart with security chasing protesters to calls of "he's behind you!" and "oh no he isn't".
At the British Aerospace AGM (115196) George Galloway MP accused the chief executive, Dick Evans, of complicity in plans to kidnap or murder Saudi dissident Al Massari, asking what was meant by the term "stifled personally". Outside over a hundred protesters gathered outside with a dozen dieins.
RTZ - CRA were bombarded at their AGM (819196) by questions and criticism from Partizans, The World Development Movement and representatives of indigenous people from across the world.
The Shell AGM ( 1515196) s,aw the introduction of a new tactic by the company - keeping single share-holders at the back of the hall. Nevertheless campaigners got involved and managed to persuade the chairman to allow a minute's silence to remember the deaths of nine Ogoni including Ken SaroWiwa. Outside the meeting hundreds gathered in support witnessed a mock-hanging by representatives of the Ogoni.
GEC's AGM (619196) was anended by members of Campaign Against Arms Trade, who organised a protest vigil and asked questions such as why GEC was expanding mto the global arms market which the chair himself described es ''difficult and declining". Strangely enough, the director in charge of exports seemed not to know whether or not there was an embargo on Nigeria.
The long-awaited Costain AGM (619196) proved to be a classic example of a well disorganised AGM. The QEII centre filled with over 250 protesters with just the first two rows seating the long-term investors. On seeing a camera pointed at the crowd, one protesting shareholder told the chairman, Sir Christopher Benson, "It's against the law to film us without consent." Smiling, the chairman asked,"Are you a lawyer?" and the response came: "Yes."
Eventually, the discussion of the environment was moved up the agenda from No. 11 to No. I and the questions and criticisms flowed (Why did Costain take the Newbury contract? Did they expect to make a profit? Could they elaborate on their single sentence environmental policy? etc.) whereas answers came less readily.
An elderly gentleman in the expensive front row seats stated, " I do believe that your macho anitude to Newbury is a grave mistake and that by taking this contentious contract you will attract terrible opprobrium from the general public, which will not reflect well on your future." While the chaimman could only apologise for the company's increased losses (£140 million in 1995), the Chief Executive, Alan Lovell, clung to notonously dubious statistics about popular support for the bypass.
The AGM ended with a ridiculous vote while protesters climbed the walls and dismantled the stage. Paul Vernon
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A BASIC GUIDE TO BUYING SHARES
1) Shares are bought and sold in the London Stock Exchange. Buying and selling is carried out by a stockbroker as individuals cannot deal for themselves in the market. A list of stockbrokers is available from the Stock Exchange onO171 797 1372.Someofthesearecheaper than others. Good Value is oflfered by the Cater Allen Sharedealing Service who charge as little as £9 on commission fees. They can be contacted on 01708 775 210. Stockbrokers offer a variety of services but if you know exactly what you want, eg 10 shares in Lloyds TSB, simply call the broker for an 'execution only' service and ask them to buy the shares of your choice, S/he will not give you any advice, but will simply carry out your instructions and arrange for the deal to be settled
2) After having instructed your broker to buy shares, s/he will draw up a contract note note which you will receive within a few days. This will show details of the transaction carried out on your behalf
3) You must send payment for your shares immediately you receive your contract note. In June 1995 the Stock Exchange adopted a 5-day settlement system, under which transactions are due for settlement 5 working days after dealing.
4) Upon reciept of payment, the purchase is registered with the company whose shares you have bought and the company's registrar will issue a share certificate in your name. You are now the proud owner of a lucative portfolio.
5) At this stage you can distribute your shares amongst your friends if you wish. Contact the company's registra for a set of share transfer forms. Fill these in to allocate one share to each friend. You are now all entitled to attend the company's AGM.
Additional notes:
a) Organise in advance - do not leave it to the last minute before buying and re-distributing shares. Your aim is to get as many dissident shareholders to attend as possible.
b) Try and achieve some consensus about what you want to do once everyone is inside. Some groups prefer to ask structured questions, others prefer maximum disruption. You can do both. A pre-AGM meeting is advisable.
c) Expect tight security and to be searched. Cameras, camcorders, tape recorders etc will be removed if found. The majority of dissident shareholders are much younger than a typical company's 'long term' investors. They will know who you are. However, off~cial company policy usually follows the line that if you have a share, you are entitled to attend the AGM.
d) Be aware of the older, private investors. They can be extremely hostile. Something to do with predjudice and a guilty conscience?
e) Talk to the other shareholders, especially reps from the institutional investors. Just one sizeable disinvestment could make all the difference to the outcome of your overall campaigns.
Compiled by LAMB, with additional notes from Corporate Watch |