Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

FCA clamps down on majority owners

The City watchdog has laid out a new set of rules that will give minority shareholders more protection and say in important corporate decisions
FCA clamps down on majority owners

The City watchdog has laid out a new set of rules that will give minority shareholders more protection and say in important corporate decisions.

The Financial Conduct Authority’s (FCA) updated listing rules are aimed at smaller investors in premium-listed companies, London’s blue chips, and are designed to end a run of damaging governance rows.

Minority owners will have the power to overrule plans put forward by majority stakeholders – those with stakes of 30% or more – who are being told to become more arms’ length from their investments. 

These new powers will include the appointment of independent directors and blocks on moves by controlling owners to take a company private.

The FCA said it was giving minority shareholders a voice “without turning minority protection into minority control”, calling for more transparency to ensure shareholders are up to date with events.

The measures are expected to be enforced in mid-2014.

London has been hit recently by controversies about the standards of London-listed companies run by foreign investors, including ENRC and Bumi, majority-owned by Kazakh and Indonesian investors respectively. 

The FCA’s director of markets, David Lawton, said: “Active engagement by all shareholders is essential to make markets work well. By safeguarding minority interests from abuse by controlling shareholders, these changes will promote market integrity and empower minority shareholders to hold the companies they invest in to account.”

ENRC’s value has diminished as it prepares to leave the stock market after being bought out by its three founders and the Kazakh government, which together owned around 55% of the company.

It was the subject of a Serious Fraud Office investigation into allegations of bribery and corruption.

Bumi has seen its share price dwindle in a similar manner. The company, which owns Indonesian coal mining assets, was more like a soap opera than a FTSE 250 company. 

Nat Rothschild, who co-founded Bumi with the Bakrie family, unsuccessfully challenged their ownership and management earlier this year following a well-documented fallout with the influential Indonesian owners. 

Shareholders voted down his proposal to replace 12 of the 14 directors on the board.

The new rules will affect Primark group AB Foods (LON:ABF), whose chief executive George Weston has an interest through his family’s 54% stake. 

There are fears tighter regulations could discourage foreign investment in the UK.

View full ENRC profile View Profile

Eurasian Natural Resources Timeline

November 05 2013
April 24 2013
April 19 2013

Related Articles

A vanadium ore stockpile at Nelly
August 31 2018
The country’s favourable regulatory system enables faster turnaround of legacy mining rights.
project area
July 12 2018
The Gabanintha Vanadium Project is one of the highest-grade vanadium deposits in the world.
Peel mining worker
August 13 2018
The company's Wagga Tank – Southern Nights area is evolving into a large high-grade deposit.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use