The European Smaller Companies Trust (ESCT) has published its initial response to the requisition for a general meeting issued by Saba Capital Management, L.P. (‘Saba’) on 18 December 2024. ESCT’s board says that, having taken legal advice, it deems the requisition to be valid but that it “does not believe there to be any merit in Saba’s proposals and will be recommending that shareholders vote against the proposed resolutions”. ESCT’s response says that “The Company has delivered outperformance against the benchmark over the medium and long-term; as outlined in Saba’s own statement, ESCT’s total shareholder return has outperformed the benchmark by 11% over the past three years”. It adds that “the Board operates to the highest levels of corporate governance, is fully independent and comprised of highly qualified individuals with a mix of experience and backgrounds”.

[QD comment: as we said on Friday when Herald – another Saba target – published its response to its requisition request (click here to read more on that), Why would the shareholders of any of Saba’s targets want to hand over control to one dominant shareholder who can then act entirely in its own interest, rather than the collective interests of all? The problem that all of these trusts face is that, because of the long-running issue of retail investors who hold their shares through the platforms tending not to vote, professional investors such as Saba get a disproportionate share of the vote. This is a concern for shareholders of all of these funds which, to varying degrees, have investments that are long-term in nature, as Saba’s proposals are very short-term and look likely to erode significant value for its long-term investors if Saba is able to drive these through. We think it is critical that these smaller shareholders get out and vote.]