Lang gives more weight to small shareholders

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The Independent Online
In a move prefiguring a government campaign this summer to emphasise the benefits of share ownership, Ian Lang, the Trade and Industry Secretary, will this week announce proposals designed to give small shareholders more say at companies' annual meetings.

The Government is concerned that "fat cat" rows about executive pay have tarnished the image of shareholding and handed the opposition an easy political target. A series of measures will be announced by Treasury ministers within the next few months to boost the appeal of private shareholding in the run-up to the general election.

Ministers privately acknowledge that, despite the massive privatisation programme, the Government has not realised its ambitions for a "shareholder democracy". This week's DTI measures, first announced in November following an earlier recommendation from the House of Commons Employment Select Committee, come shortly before the 30 April British Gas annual meeting. Shareholder outrage over huge rises for then chief executive Cedric Brown at the British Gas meeting a year ago was one of the factors forcing the Government to take action on shareholder rights.

The DTI's proposed changes to the Companies Act are expected to force companies to pick up the bill for circulating resolutions put forward by individual shareholders, as long as certain conditions are met. The conditions will include enough support from other shareholders and timeliness in submitting the resolution.

The cost of putting an independent resolution to the vote at the annual meeting can run into thousands of pounds, and companies will be reluctant to meet the cost. But Mr Lang has recognised the importance shareholders attach to the ability to raise issues at annual general meetings.

Some companies have made it steadily more difficult through amendments to their articles of association for their private shareholders to have a voice. Pensions and Investment Research Consultants, a corporate governance research group, has reported that six companies - National Westminster Bank, Welsh Water, BTR, Williams Holdings, Rank and Royal Insurance - have recently taken such steps.

Shareholder frustration led to chaotic scenes at least year's British Gas meeting, with the introduction of a live pig named Cedric and television reporters resorting to smuggling cameras into the heavily guarded meeting.