Nominee shareholders should have the same rights as registered shareholders
25th March 2015
The Wealth Management Association (WMA) believes the time is now right for the Government to mandate that those shareholders who hold their shares in nominee accounts (and manage their portfolios with or without advice) should have the right to opt-in to receive the same rights as registered shareholders.
Currently under the 2006 Companies Act, nominee shareholders are not automatically entitled to receive information relating to the companies in which they have invested nor to attend or vote at relevant general meetings. Some firms do offer such a service but it is not widespread. Any automatic right to opt-in should not have to apply to those who hold their portfolio with a discretionary investment manager as it is the investment manager who has been given full discretion to manage that account in accordance with the relevant mandate.
The Department of Business, Innovation & Skills (DBIS) is currently working on the implementation of the Kay Review, one of whose recommendations is for the Government to explore the most cost-effective means for individual investors to hold shares directly on an electronic share register. Professor Kay expressed concerns that the electronic intermediated shareholding model creates barriers to engagement, and uncertainty for individual investors. Allowing shareholders an automatic right to opt-in will go a long way to meet Professor Kay’s concerns.
Liz Field, CEO of the Wealth Management Association, commented:
“WMA is keen to work with the Government to ensure that the nominee model is as attractive as possible to shareholders. There are over five and a half million nominee accounts in the UK and giving those who want it the option to receive information about the companies in which they invest, to attend and to vote at the company meetings will help ensure that nominee accounts become even more popular.
“We need to ensure that the Government does not mandate all shareholders to receive information and voting rights as it should be the choice of the individual shareholder whether they want to opt-in. This will help ensure that the costs and administration to everyone in the chain – companies, registrars, brokers, and investors – is kept to a minimum. And to ensure a level playing field with registered shareholders we believe that as much as the costs as possible should be borne by the companies.”
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Notes for Editors
About the Wealth Management Association (WMA)
- The Wealth Management Association (WMA) is a trade association representing 186 Wealth Management firms and Associate members.
- 110 Full members are wealth management and stockbroking firms that deal directly for over 4 million retail investors.
- They deal in stocks and shares and other financial instruments for individuals, trusts and charities through a range of services spanning execution only, advisory and discretionary fund management.
- 76 Associate member firms provide professional services to our full member firms.
- WMA’s aim is to ensure that business, regulatory, tax and other relevant changes across Europe are appropriate and proportionate for the investment community and their clients.
- The WMA exists to support its members and their clients in the following ways:
- To be an advocate for the sector with governments, regulators and the wider financial services community;
- To influence policy and decision makers within the wider sector to the benefit of WMA members and their clients;
- To research and provide definitive information about the sector as required for members and in support of the influencing and advocacy objectives;
- To be a thought leader, making members aware of emerging changes, regulations and issues as well as providing support to firms to enable them to develop good practice and overcome challenges;
- Facilitating the sharing of good practice, enabling the membership as a whole to benefit from the latest developments affecting the sector.
- Our member firms manage in excess of £650 billion of wealth in the UK, Ireland, Channel Islands and Isle of Man.
- The firms operate across more than 580 sites, employing over 32 000 staff.
- The firms also run 6 million client portfolios and carry out over 20 million trades a year.
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