AW, WEST MIDLANDS
The language used in the Halifax's letter presents a barrier to shareholder democracy. Phrases such as Tier 1 Capital, revaluation reserves and so on probably disqualify the majority of small shareholders from participating in the affairs of the companies they own.
This is fertile ground for the Plain English Campaign. In an age of mass share ownership, shareholders surely have a right to understand the documents they receive.
In any event, shareholding democracy can be something of a mirage. Decisions are taken by a majority of votes according to the normal rules. But the number of votes carried by the large institutional investors is usually enough to carry the day and, with rare exceptions, they usually vote to support the board's recommendations.
It tends to be only the tightly contested takeover battles where shareholders' votes affect the outcome. Even then, the institutional shareholder's vote is likely to be decisive. Arguably, shareholder votes are in practice an (expensive) charade.
On this occasion the Halifax board wants approval to create 1 billion preference shares, some of which it will give to members of the Birmingham Midshires building society, which it is hoping to take over.
In your letter you were worried that the preference shares would confer preferential rights over dividends and Halifax assets, and that this would lessen the value of your ordinary shares. In practice, this would be relevant only if the Halifax had severe cash-flow problems or even became insolvent.
Preference shares work like corporate bonds with regular fixed-income payments.
If the Halifax's profits increase, it is the ordinary shareholders, not the preferential shareholders, who benefit. They are likely to receive increasing dividends and enjoy better long-term returns than preference shares.
Who levies insurance?
I have a leasehold flat and the freeholder wants to charge me for buildings insurance. The freeholder says I must insure the property through him, but the building society says I must buy its insurance, which is cheaper.
This should have been sorted out by your own solicitor when you bought the flat. You could return to that solicitor for advice, but if he or she is unhelpful or defensive, or wants to charge you lots of money, forget it. Pursue any complaint against the solicitor at a later stage.
First concentrate on the main problem and tread carefully. Get in touch with the Leasehold Advisory Service on 0171-493 3116. Hopefully this dispute can be solved simply and amicably.
There are unscrupulous landlords who will seize any chance to take money from you. There have been cases where leaseholders have run up substantial legal costs fighting a freeholder. In the worst cases, leaseholders have inadvertently broken the terms of their lease with dire consequences.
The lease will say who has responsibility for insurance. But even if the freeholder has the right to arrange insurance, you can still go to a leasehold valuation tribunal to contest excessive costs.
Have you won a prize?
I've seen advertisements for numbers to ring to check whether Premium Bond numbers have won a prize. Doesn't Ernie write to people with winning bonds?
National Savings does notify people when they win a Premium Bonds prize. But many bondholders don't get notification because they have changed address and forgotten to tell National Savings.
Please don't waste money on premium rate phone lines; write to the National Savings Premium Bond Office, Blackpool FY3 9YP, giving details of all your Premium Bond numbers, your previous addresses and your personal bondholder's number if you have one. In theory, your personal bondholder's number should be enough to find out about any winnings, but in practice this may not be so.
You can also use the internet. Key in your personal number at www.nationalsavings.co.uk
Main post offices have the London Gazette, a quarterly publication that carries the numbers of all the bonds where a prize has not been claimed.
Write to the personal finance editor, Independent on Sunday, 1 Canada Square, Canary Wharf, London E14 5DL, and include a phone number; or fax 0171-293 2096; or e-mail firstname.lastname@example.org
Do not enclose SAEs or any documents you wish to be returned. We cannot give personal replies, or guarantee to answer letters. We accept no legal responsibility for advice given.