The UK Shareholders' Association (UKSA) is pushing BAE Systems and the Takeover Panel to help ensure as many investors as possible vote on the British defence company's proposed £30bn merger with EADS – after discovering that the vast majority will not be able to vote directly because their shares are held in nominee accounts.
Investors accounting for 86.5 per cent of BAE's shares hold their stock in nominee accounts, meaning they cannot vote directly on the deal. Although they can instruct the nominee account manager to place the vote on their behalf, in reality most private shareholders do not realise this and most brokers do not bother to tell them, a UKSA spokesman said.
"Many individual investors who think they own shares in BAE Systems will find that they legally don't, because they won't be asked to vote on the merger when that time comes," the spokesman said. "The outcome could be decided by holders of less than 15 per cent of the shares, because as many as 86.5 per cent of the shares are held in nominee accounts, a substantial number of which will be for private individuals," he added.
In a letter to BAE chairman Dick Olver, UKSA described the situation as "shocking, utterly reprehensible and no less than a scandal". It called for the company "to put pressure, both private and public, on all nominees on its share register to ensure all their clients are fully informed about the proposals and able to instruct their nominees how to vote".
A UKSA spokesman said that BAE Systems had the highest percentage of shares in nominee accounts he had seen.