City needs to build on its victory over US predator Saba

Investors in six of the investment trusts targeted by Boaz Weinstein have sent the US corporate raider packing.

They overwhelmingly rejected proposals by his hedge fund Saba Capital to oust their boards and replace them with his own allies.

Weinstein’s efforts have been hampered by a surge in turnout following a campaign by The Mail on Sunday encouraging shareholders to exercise their right to vote.

However, the saga has raised concerns about the challenges faced by private shareholders wanting to cast their votes.

It has also prompted questions over how well they are kept informed over critical decisions regarding their portfolios by investment platforms.

In response, The Mail on Sunday today publishes a five-point manifesto to boost shareholder democracy in the UK.

The manifesto calls for:

• Making it free and easy for shareholders to vote;
• Sending investors information about important votes unless they specifically opt out; 
• Axing stamp duty on purchases of UK-listed shares; 
• Scrapping old EU rules on costs; 
• Giving shareholders the option of attending all general meetings in person. 

It comes after The Mail on Sunday revealed last month that Scottish Widows and two other platforms owned by Lloyds Bank were not allowing investors to vote on the Saba proposals. The revelation prompted the bank swiftly to reverse the policy.

Under current rules, Saba –which had built up sizeable stakes in each of the targeted trusts –needed only 50 per cent of votes cast to achieve victory.

It meant Saba would have won if other shareholders did not vote.

As a result, turnout among smaller investors, who account for a large portion of the share register of each trust, was crucial in deciding the outcome of Saba’s campaign.

But the trusts’ efforts have come at a high cost, which is likely to infuriate shareholders, who will be forced to foot the bill for Saba’s attacks. 

A spokesman for the Herald Investment Trust, which defeated Weinstein last month, estimated that its bill to fund the counter-campaign could be as high as £800,000.

While the other trusts are not as large as Herald, and therefore should have lower costs, the total bill is likely to run into millions of pounds.

A portion of these costs will be borne by Saba itself, which holds stakes of between 19 and 29 per cent in each of the seven trusts.

But a substantial chunk will be paid through the fees of individual investors who do not have Saba’s deep pockets.

Edinburgh Worldwide, the remaining trust targeted by Saba, holds its meeting on Friday.