• ‘Stock lending’ describes a practice which is in fact a sale and repurchase agreement; the ‘borrower’ has all the rights of ownership – including voting rights – and is the legal shareholder. • Most private investors have now been forced into online accounts – and why not, they are immediate, simple and efficient? • These accounts are technically ‘pooled nominee accounts’ – the broker or an associate owns a pool of stock that matches his clients’ investments. The broker, not the investor is the shareholder. • Shareholders earn fees by ‘lending’ their stock to others. • The decline of active management means that a large proportion of individual and pension fund equity investment is made via ETF’s, index funds, trackers and closet trackers. •….and the legal shareholders in these cases are……? •…and their reaction to an opportunity to ‘lend’ their shares for a fee would be...? •….so the statement; ‘Most shareholders are beneficial owners with their own money at risk’ is (a) true or (b) false? •…. and the core assumption of the corporate governance codes, that directors should be accountable to their shareholders is (a) sensible or (b) myopic? In a nutshell, the ‘ownerless
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corporation’ first defined by Lord Myners over ten years ago is upon us. But it’s even worse than that: we don’t know who does own the major corporations and we don’t know what their interests are. What we are proposing is to mobilise the power of individuals to direct their savings in a way that forces necessary change. And to start by pointing to solutions that minimise or avoid altogether annual percentage charges on their wealth. Like any successful grass roots movement, our motivation is to help others rather than just ourselves. We don’t want to underestimate the amount of fresh thinking that is needed in all sorts of areas. We are very much at the early stages in this project: we have a collaborative team approach, and everyone with ideas to contribute is welcome. This is an opportunity to make a real difference to people’s lives and even the way in which the whole corporate sector thinks – that’s the vision we are working to! UK Shareholders Association (UKSA) originated in 1992 as a small group of private investors concerned at the scandal of excessive executive pay, as exemplified by the utilities sector after privatisation. We haven’t don’t too well there so far, have we? But we know from experience the potential power of a shared passion to get people working together. We need more people to help
us tackle this project – and it would be nice to bring our average age down a bit too! We also need more members generally – their subscriptions add up and help us keep going, and the more members we have, the more networking opportunities there are for everyone. People do not join the UK Shareholders’ Association primarily to make money. They get to be part of a network of individuals with a common interest in investment. The membership fee pays for a small secretarial function, maintains a web site, supports a programme of corporate visits/briefings and helps communication amongst the membership including a regular magazine. Though any additional funding support is always welcome! If you are interested in investment, and especially if you are independent of the mainstream investment management and financial advice sectors (though you may have worked in them in the past), and have the time and interest to take part, why not join us? Membership is only £50 per annum (£25 first year). This is an opportunity to help millions of people, not just ourselves. Join through the website, http://www.uksa.org.uk or to discuss participation email stc@uksa.org.uk
The Transparency Times | www.transparencytaskforce.org | April 2017 | Edition #12