FCA sets out Saba response
Changes to listing rules would make life harder for the US activist, writes Dave Baxter.
26th June 2026 12:04
by Dave Baxter from interactive investor
Photo: Thomas Fuller/SOPA Images/LightRocket via Getty Images.
The Financial Conduct Authority (FCA) has set out rule changes that would make it harder for activist investors, such as Saba Capital, to take control of investment trusts.
The regulator’s proposals, if implemented, would ensure that the link between a substantial shareholder in a trust (with voting rights of 20% or more) and an individual they had put forward as a potential board director would be “adequately accounted for”.
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As such, a board member who had been put forward by a substantial shareholder would be unable to take part in the process of appointing the new investment manager, and would be unable to vote on the decision.
The FCA also proposed that a substantial shareholder should be prevented from voting on material changes to a trust’s investment policy if said shareholder were also the investment manager.
The FCA did not explicitly name Saba but the changes do relate to the activist’s recent behaviour.
Saba has managed to oust the boards at Edinburgh Worldwide Ord (LSE:EWI) and Impax Environmental Markets Ord (LSE:IEM), where it is a substantial shareholder, and bring in its own nominated replacements.
It is expected that those boards will then appoint Saba as the investment manager, allowing them to use the assets to keep investing in other discounted trusts.
Investment trust trade body the Association of Investment Companies (AIC) had previously called for changes to the listing rules, urging the FCA to address potential conflicts of interest, especially around substantial shareholders, to amend rules around the independence of board directors and to prevent investment managers that are also substantial shareholders from voting on changes to a trust’s policies.
Richard Stone, chief executive of the AIC, said: “These proposals would strengthen investor protection, particularly when a substantial shareholder like Saba Capital seeks to replace the board and become the manager. They address a gap in the rules where a shareholder who wants to manage the company can seize control of the board to promote its own interests at the expense of other shareholders.”
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