Shareholders in Barings' Tribune Investment Trust voted to defeat a proposal by Advance UK, a pounds 50m vulture fund, which would effectively have forced the pounds 320m trust to break up.
Advance UK, backed by institutional shareholders, had proposed to make the investment trust convert to a unit trust, allowing them to realise a quick gain of 10 per cent. The gain was possible because shares in the investment trust were worth 9 per cent less than the trust's assets. If it switched to a unit trust, the assets could be sold at full value.
But small shareholders complained they were forced either to go along with the proposal, putting them into a unit trust with charges three times as high, or realise their investments, incurring a hefty bill for capital gains tax. The trust has 2,000 retail shareholders.
Investors defeated the resolution by 56.8 to 43.2 per cent in an unusually high turnout of 77 per cent. The trust remains at the centre of a two- way bid battle.