Private Investor: Tell Sid - the big boys don't want him any more

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The Independent Online

Time to take a stand, I think. Like my fellow columnist Derek Pain, I take great exception to the decision by mmO2, implemented in part last week, to eliminate its small shareholders; that is, the ones who want to hold shares directly through paper certificates, rather than through a nominee account at a broker.

As a part-legatee of the great BT sell-offs of the 1980s, after being demerged from the group a couple of years ago, mmO2, a relatively small entity, found itself with vast numbers of "Sids" on its books - people who have maybe a couple of hundred shares in the company.

These people already, naturally, get all the mailings about the annual results and so on, and, now that mmO2 is looking to pay some dividends, the cost of all the administration, postage and packing for such a small army is getting too much for it.

So, the smaller shareholders have been given what looks to be a reasonable offer: a premium of 5p over the current share price of about 120p; but if they didn't take up that offer voluntarily last week, then they will be compulsorily bought out. They are no longer welcome on board. This is all being done according to the rule book and within the law, but it is surely a harsh way to treat people who are, after all, part-owners of the business.

Well, mmO2 does have a point. But if it finds having these small shareholders onerous, then that is a problem that affects all companies - although smaller companies are harder pushed to deal with this than the big boys are.

To be fair to mmO2, it is not the first company to try to do this. I seem to remember having a similar initiative foisted on me by Hanson a few years ago. However, it should not be up to mmO2 to do something about it. There should be a change to the Companies Act, so that there is some sort of certainty and consistency of approach, if that is what is needed.

As far as I am concerned, the mmO2 move - along with others like it - is morally unjustifiable and something close to misappropriation. If you own property and don't wish to sell it and don't have to do so to settle debts or because of a court order against you to recover someone else's property, why should you have to do so? This is a very bad precedent, indeed.

One consequence of it may be to deprive the environmental and anti-globalisation protesters of a voice at all sorts of companies' annual general meetings. Not just them, either; cheated company pensioners, disgruntled employees and exploited suppliers can all buy just one certificated share in a company and turn up to the AGM to ask awkward questions - which is their right and serves a useful function. We even had a pig called Cedric turn up at British Gas AGMs years ago to protest about executive pay.

They are a pain in the butt for the management, who would like these things to run as smoothly as possible, but they are a powerful reminder that even if you own only £5.06 of a multibillion-pound business, such as, say, Shell, it is your company too, and you are entitled to use your democratic rights. After the mmO2 move, what is to stop lots of the largest corporations setting a minimum shareholding way higher than it is now?

Now, I am one of those people who has placed most of their shares in nominee accounts with brokers, because of the hassle of dividend cheques and other mailings. But I do miss them and I have always tried to vote.

I believe that it is possible to reclaim some of these rights even in a nominee account, but it seems even more hassle to do that than leave things be.

And so the management of our public companies has discovered two novel ways of avoiding angry and difficult shareholders; clearing the share register of small investors and the nominee account.

Whatever happened to popular capitalism?


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