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Green light for pounds 12bn Halifax stock flotation

Halifax Building Society's pounds 12bn flotation is firmly on track after the vast majority of its 9 million members voted in favour of its conversion to a bank, clearing the way for share pay-outs worth an average of pounds 1,300 to individuals in June.

The vote at the special general meeting held at the Sheffield Arena was virtually rendered redundant, however, as Jon Foulds, chairman of Halifax, said the resolution to convert to a bank had already been passed by postal votes.

"This won't be the biggest exercise in democracy this year, but it will be the second-biggest," Mike Blackburn, chief executive of the society, said.

Some 5.15 million of the society's 6.9 million investing members voted for the plan while just 110,000 voted against. The total number of votes cast in favour was significantly more than the 3.3 million needed to approve the conversion plans.

Just 1,090 members struggled through the icy wind to the Sheffield Arena. Despite the low turnout, members heard passionate speeches pitched against the conversion plans.

Leo Westhead from Scarborough said: "The success of this resolution will represent the triumph of selfish, short-term individualism over collective community concern. To my mind it is an act of social vandalism."

Mr Foulds responded: "I think the Halifax has outgrown mutualism." He received the surprise support of John Spalding, a former chief executive of Halifax. Speaking from the floor, Mr Spalding sympathised with those members of the society who had spoken so passionately in favour of mutuality.

But, he said, it was "quite clear that the day of the great national building society was over". Some of the 30 or so speakers from the floor at the two-and-a-half hour meeting had made long journeys. Professor Jacob Ziegel had travelled from Toronto to complain he was unable to receive his distribution of shares because of Canada's legal regulations.

Mr Foulds told him he had the option of using a registered address in the UK but Professor Ziegel pointed out that this may have tax implications for members like him who reside abroad. Around 70,000 members live overseas, of whom 30,000 live in North America and are also unable to receive free shares.

Serge Lourie, who has led the Halifax Action Group, reminded Mr Foulds of his words in an interview in 1994 in which he said he was convinced of the benefit of mutuality. The annual report of Halifax that year recorded the merits of mutuality too, Mr Lourie said.

"We believe the conversion process has been fundamentally flawed. The transfer document is biased and does not give the arguments against becoming a bank," he said, pointing to the lower borrowing rates and higher savings rates offered by building societies compared to banks.

The meeting also heard concerns about disabled members who may be losing out because their accounts are held in trust. While a Bill sponsored by Douglas French, Conservative MP, will rectify this issue for societies announcing conversion plans in the future it will have come too late for Halifax members.

Just over 4 million will receive the minimum allocation of 200 free shares.

The rest will receive this, plus an additional handout of up to 981 shares depending on the balance of their accounts on 25 November 1994 and 24 February 1997.