It is widely accepted that small shareholders get a raw deal. They are regarded as third-rate investors, unworthy to clean the shoes of the powerful institutions which dominate proceedings in the City.
I cannot see any improvement occurring until the Government, what ever colour, is prepared to take a more active role in considering the position of buy and hold individuals who are prepared to sink some of their often hard-earned savings into equities.
The UK Shareholders' Association, representing private investors, is, not surprisingly, appalled at the treatment handed out to us little'uns who now account for 10.2 per cent of the stock market. Our direct influence has declined dramatically. When statistics were first compiled in 1963 we accounted for 54 per cent. Even so the 10.2 per cent figure, struck in 2008, represented a not inconsiderable £117.8bn.
The growth of various funds and trusts has reduce the declared holdings of individuals. Yet, paradoxically, many of these powerful institution are merely stewards of other people's cash. The emergence of on-line nominee accounts has also contributed to the decline.
The only time small shareholders enjoy the influence they deserve is when a closely fought battle, usually a takeover, erupts. Even then if they can be discounted they will be.
Its quite possible that some of our blue chip companies – such as confectioner Cadbury – would have survived foreign assaults if private investor votes had not been swamped by hedge funds and other short-term institutions. As Derek Miles and John Hunter, authors of a UKSA booklet called Responsible Investing, say: "Collectively, they have certain qualities not always present in other shareholders. He and she are the ultimate shareholders for the long-term. They think like owners and have an owner loyalty."
And they go on to echo many of my thoughts. "Individual savers and investors have been treated disgracefully... viewed as fodder for the extraction of value by the financial services industry."
Investors have been "disenfranchised and ignored" and the diminishing freedom of small shareholders to manage their interests "is close to scandalous and must be challenged".
One response could be shareholder committees. I suppose such organisations could only be attached to major companies – say the top 350. Shareholders could not impose actions on the company but could make their views known, internally and externally. I suspect such committees would not be viable in the small cap world.
Other UKSA suggestions include the need for regulators to provide more shelter for shareholders from exploitation and mistreatment and the removal of discrimination against individuals stuck in nominee accounts.
The current crop of nominee accounts, supported by government schemes such as ISAs, is totally unsatisfactory. Run mainly by stockbrokers for both buy and hold investors and active traders, they block direct contact between shareholder and company. For example, in many accounts a shareholder is not even entitled to the company report. Often dividends are rolled up, distributed when seen fit.
The UKSA also has a swipe at the exorbitant levels of directors' pay – "an executive director of even a second tier company would consider himself poorly rewarded if he did not get more than the Prime Minister as basic pay, with bonuses and options on top". Indifferent institutions, content to develop their own agendas, must shoulder much of the blame.
I have criticised private share placings on numerous occasions. The UKSA appears to prefer old fashioned rights issues saying that pre-emption rights should be preserved. Placings, which are becoming increasingly prevalent, are, I believe, unfair. Most shareholders are denied participation with just a privileged few, including directors, invited to take part in a share sale at below the then stock market price.
With a general election looming the UKSA broadside is well-timed. But I doubt if much support will be forthcoming from politicians. After all shareholder rights is not an obvious vote winner. But I am disappointed, although not surprised, that an organisation representing individual shareholders does not support the retention of paper share certificates which have existed for 500 years and provide indisputable proof of ownership.
The last estimate I saw was that seven million shareholders remain on the paper trail. They do not want to suffer the vagaries and dangers of the internet; they prefer the obvious comfort of certificates.