Friday July 4, 06:05 PM
Activist investors reined in by disclosure rules
By Alice Ross
Investors in investment trusts look set to get a better price for selling their shares, after the government this week changed the rules on the disclosure of shareholders' positions in companies. The move will prevent major shareholders from
concealing their positions and putting pressure on boards to make decisions that may not be in the interests of retail shareholders. From September next year, anyone with a position of more than 3 per cent in a company - including those holding shares through contracts for difference (CFDs) - will have to declare it.At present, shareholdings via CFDs - a form of derivative, similar to spread bets - are exempt from disclosure. So concerns have been raised that activist investors - those looking to take short-term positions in a company to make a quick profit - were distorting share values and the transparency of voting. Although it is the CFD writers, not the holders, who are eligible to vote, it is believed that holders put pressure on writers to represent their views. This can include pressuring a board to wind up an investment trust to profit from shares that are trading at a discount to their net asset value. However, this could be against the longer-term interests of retail shareholders. Retail investors often have no voting rights, as they buy through brokers who put them into nominee accounts. One notable exception, here, is Brewin Dolphin (LSE: BRW.L - news) . Greater disclosure may also mean retail shareholders get a better price when selling, as the market will be aware of interest from larger activist shareholders.
Click here for more from FT.com
|
Send Article by Email
