The problems19 Oct 2021 22:21
The great difficulty with this retail “shareholder action” is there are manifold problems which are probably not surmountable in law.
1. Shareholders, or more correctly “members” of the company have no rights of ownership in the company. There is nothing in CA 2006 which suggests they have such rights. A limited company is a legal person in its own right and cannot be owned by anyone. In 1948, the Court of Appeal ruled that “shareholders are not, in the eyes of the law, part owners of the company”. The House of Lords strongly reaffirmed that ruling in 2003, a judgement the EU’s recent Shareholder Directive echoed. Ownership of capital – in this case, owning shares – is therefore legally and theoretically not the same as ownership of the company.
2. Buying “shares” through an online broker and nominee is a fallacy. You just buy a financial instrument which reflect the value of the shares, but you don’t own them, your nominee owns them, and it is the nominee’s name which appears on the share register.
3. The nominee is an execution only broker who will buy and sell on your behalf. He will vote at general meetings according to your instructions and will give you a proxy letter to attend such general meetings, but he is the “member” of the company. He will not take part in “shareholder action” because he is a disinterested party.
4. The only way to become a member is to ask for certificated shares instead of nominee shares. That way, you end up on the shareholder register and can assert the rights of a member under CA 2006.
5. With certificated shares, you cannot buy and sell them at the press of a button, which is why nominee shares are so attractive.
6. I have concluded that I am not a shareholder, but simply a small investor. I am certain that my name is not on the shareholder register and my nominee will not sign any CA s303 requisition because it’s not his job as an execution only broker.
I think its a lost cause, sad to say.
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