‘Distorted rights distort governance’
30th June 2023 14:48
by Jemma Jackson from interactive investor
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interactive investor responds to Primary Markets Effectiveness Review from a shareholder democracy perspective.
interactive investor, the UK’s second-largest investment platform for private investors, this week responded to the Primary Markets Effectiveness Review.
The platform welcomes reform designed to make the UK a more attractive place to list, but emphasises that these reforms need to balance UK competitiveness with the need to protect the rights of retail shareholders as well as wider market integrity.
Interactive investor has also reiterated calls for plain English in investor communications. For example, ii believes that the disapplication of pre-emption rights has become so normalised and commonplace that many shareholders don’t even think about it anymore.
ii want to see companies spell out the implications in plain English so that private investors can make a fully informed decision about what they might be giving up. Interactive investor has long called for a ‘Plain English Handbook’ for UK PLC.
The platform also took the opportunity to again call for fair access for retail investors when it comes to IPOs and secondary issues.
Richard Wilson, CEO, interactive investor, says: “We strongly support the principles behind listing rule reform to make the UK more competitive, but this doesn’t have to be at the expense of shareholder rights. Distorted rights distort governance, and there is a high risk that the basic principle of ‘one share, one vote’ is not fully appreciated until it is gone.”
The impact on pensions
Commenting from a pensions perspective, Alice Guy, Head of Pensions and Savings, interactive investor, says: “Making it easier for companies to list in the UK is important, but it shouldn’t come at the cost of ordinary investors and pension savers. A significant 12% of UK quoted shares are currently owned by individual investors, many of whom invest in shares as a key part of their retirement savings. For these ordinary investors, being able to vote on issues that might affect their future wealth and retirement plans is crucial.
“We don’t want to usher in a world of shadowy backroom deals, where the ordinary investor with modest means is squeezed out in favour of the privileged few.”
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