Radical change… or a bit meh? Listing Rule changes mean shareholder approval is no longer required for major transactions – so what is the practical impact of that? Simon Wood looks at the impact on investor relations in this soundbite… Shareholder Meh-tings.
After the gallons of legal ink spilt on the recent Listing Rules changes – what impact will they have in practice?
Welcome back to season 2 of Mergerspresso - AG's soundbite on all things corporate finance. I'm Simon Wood.
Listed companies no longer need shareholder approval for their larger transactions. The approach has shifted to a US-style, disclosure based system, where the buyer needs to beware.
Institutional shareholders opposed this change while companies were all for it. So how is the market adapting to this polarisation of views?
A shareholder vote is a blunt tool – in recent years only one class 1 vote was defeated – but many more weren't proposed. Shareholder dissent in early consultation led to those deals being quietly shelved.
And that shows there will be little change in practice. It would be a courageous board not to take account of shareholder sentiment – with the attendant risks of public criticism and AGM dissent
We think that the recent changes will incentivise listed companies to focus more on investor relations – we advocate:
And so we don’t see the changes as having a massive impact on the previous status quo – they are more a shareholder meh-ting.
Get in touch if you'd like to chat more and join us next time for the post budget review of the AIM market.
