Clive Hopewell and Adam Carling from the Charles Russell Speechlys Capital Markets team were pleased to join forces with Marcus Stuttard, Head of AIM, Malcolm Davis-White QC of XXIV Old Buildings and Harry Chathli of Luther Pendragon for their annual AIM Seminar on Friday 20 November, which featured an animated panel discussion on shareholder activism.
The discussion revealed that there has been a marked increase from 2010 to 2015 in companies being affected by shareholder activism across the piece, not just the AIM market – in fact the number of companies affected globally has doubled over the last five years (Activist Insight survey).
Key themes and pointers the panel wished to address for its audience of company directors and brokers included:
- The company has to put themselves into the shareholders’ shoes and work with financial PR agencies and proxy agents to understand how the shareholders will vote. In many cases, what the shareholder activists want is a positive change, and this is something that should be listened to, not just rejected out of hand.
- Where the company finds itself in more hostile scenarios, such as an attempt to unseat the entire board, the company needs to alert its advisers quickly and ascertain what protections it has available, for example under the Takeover Code or under a relationship agreement entered into with a controlling shareholder.
- The 5% threshold now required for shareholders to requisition a general meeting (down from 10%) had not proved a high hurdle for activist shareholders to reach.
- For listed companies with a disparate shareholder base, a 25% stake can be enough to get ordinary resolutions passed, eg making board changes, although below the 30% level generally regarded as “control”.
- Any advice given to management in response to shareholder activism can become disclosable if the case becomes litigious.