Companies Act 2006: Nominee Operators
Lord Naseby
To ask Her Majesty’s Government what plans they have to review with the Financial Conduct Authority the implementation of the Companies Act 2006 in relation to nominee operators so that private shareholders with nominee accounts automatically receive reports and accounts free of charge for the companies in which they invest.
Lord Naseby (Con)
My Lords, I beg leave to ask the Question standing in my name on the Order Paper and, in doing so, declare an interest as a holder of some AIM shares.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, the Government are committed to encouraging better engagement between investors and companies. Indirect investors should be able to receive information from the companies in which they hold shares, if they choose to do so. We acknowledge that private investors in nominee accounts do not automatically receive such information, so we have recently commissioned research to determine how shares are currently held and what steps we might take to encourage more investor participation.
Lord Naseby
My noble friend’s Answer is encouraging, in that this research is being undertaken, but is she aware that the United Kingdom has the largest number of private investors anywhere in the world? Furthermore, thanks to the policy of my honourable friend in another place, those private investors can invest in AIM shares within their ISAs, which are one of the principal saving mechanisms of any family today. Against that background it is surely important that this research is done quickly, so that the holders of all shares can attend AGMs and receive the annual accounts.
Baroness Neville-Rolfe
My noble friend is entirely right. We expect the findings of our research by the end of March and we will therefore be able to proceed with appropriate steps quickly.
Lord Lee of Trafford (LD)
My Lords, given the pretty abysmal level of attendance at annual general meetings and the reluctance of those who attend to ask questions in a formal setting, would my noble friend consider encouraging public companies to hold a second, more relaxed meeting after the statutory one, essentially so that private shareholders can meet and question non-executive directors to encourage greater shareholder involvement?
Baroness Neville-Rolfe
My Lords, the FRC corporate governance code already makes it clear that the board as a whole, which obviously includes the non-executive directors, has a responsibility to ensure satisfactory dialogue with shareholders. We believe that many companies and investors are already holding meetings of the kind that the noble Lord suggests, and we have encouraged such strategy discussions outside the formality of the AGM.
Lord McFall of Alcluith (Lab)
My Lords, the financial crisis illustrated that shareholder engagement was a sham. Is there not a case for the Government taking immediate action, forgetting about having any consultation on this and ensuring that the noble Lord’s reasonable request—that private shareholders receive these free accounts—can be done with a loud and clear message from the Chancellor of the Exchequer?
Baroness Neville-Rolfe
My Lords, I was very pleased to see the extension of ISAs to AIM. I am delighted that these questions have been asked today so that we are debating the issue. I am sure that noble Lords will be pleased to hear that we are looking into exactly what is needed with a view to taking action.
Lord Stoneham of Droxford (LD)
Could the Minister tell the House what progress the Government have made on implementing the recommendations of the Kay report to encourage long-term share ownership and commitment, rather than simply trading in the stock market?
Baroness Neville-Rolfe
My noble friend raises a very important issue. The Government have made a sustained commitment to reform, working with companies and investors. We published a comprehensive progress report on that in October. Professor Kay also recommended that we look at the most cost-effective way for investors to hold shares electronically as individuals. That is one of the reasons why it is so important to explore that option.