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Darling delivers slap in face for investors

The Government set itself on a collision course with small shareholder groups yesterday after the Trade Secretary, Alistair Darling, said he would fight to repeal an amendment to the Company Law Reform Bill that would have given voting rights to those who hold shares in nominee accounts.

The Conservatives and Liberal Democrats helped push through the amendment when the Bill had its first reading in the House of Lords this year, securing a victory for small shareholder groups who have lobbied for changes to the rules for more than a decade.

Most brokers hold their customers' shares in nominee accounts to help speed up transactions and keep costs down. But under current law, people who hold shares in this way are not entitled to vote on company matters. The amendment would have reversed this. But Mr Darling said yesterday it would be a government priority to try to repeal the amendment. The Bill has its second reading in the Commons today.

"I don't think the Bill can stand as it is at the moment because it's too expensive and too complex. We will seek to overturn what is in the Bill [nominee shareholder rights]," he said.

Corporate registrars have been among the chief critics of the amendment, but claimed yesterday they disagreed with the wording of the changes, rather than the principle.

Another big change to the Bill in the Lords was a successful attempt by the Conservatives and Liberal Democrats to repeal a clause which would have given the Government the power to force institutions to disclose their corporate voting record. Mr Darling said he would look to reinstate the clause but stressed the Government had no plans to exercise the power in the short term.