EP Global Opportunities responds to shareholder unrest – At its AGM in April 2021, two resolutions were passed with a majority of less than 80% of the votes cast. The first of these was to re-elect the chairman, Teddy Tulloch, as a director, and the second to renew the authority of the company to sell ordinary shares held in treasury at a discount to the prevailing net asset value per ordinary share,
In accordance with the provisions of the AIC Code of Corporate Governance, the board is required to consult and engage with the relevant shareholders to understand and discuss their concerns with respect to these resolutions.
Three shareholders (all of which are institutional investors) voted against the two resolutions and they accounted for the overwhelming majority of the votes against both resolutions. The company engaged with these shareholders to better understand their concerns.
It is the board’s understanding that the votes against the resolution to re-elect Mr Tulloch were primarily driven by his having been in office for over nine years and due to the lack of female representation on the board. Measures to tackle this were in the works: two new directors, including the new chairman, were appointed to the board on 18 May 2021 and subsequently Mr Tulloch retired as a director and chairman on 9 June 2021. The board now consists of four directors each of whom has been in office for less than nine years, and the board now has female representation of 25%.
It is also the board’s understanding that the vote against the resolution to allow the company to sell ordinary shares held in treasury at a discount to the prevailing net asset value per ordinary share was principally due to the voting policy of certain institutional shareholders. The board will consider, prior to the AGM in 2022, whether it remains appropriate for the company to request such authority from shareholders. [We’d say no it isn’t appropriate. There is an argument that it benefits shareholders to buy in shares at a discount and re-sell them at a narrower discount and this is true. However, on an accounting basis, once shares are bought into treasury at a discount, the NAV is uplifted as though they had been cancelled. Reissuing them at a discount lowers the NAV for all investors.]
The board would like to thank those shareholders who responded to the board for their engagement and confirms that it remains committed to maintaining a positive dialogue with all shareholders.
EPG : EP Global Opportunities responds to shareholder unrest