Sharesies: The platform as a major shareholder in any company

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Forums › Finance and wealth management › Sharesies: The platform as a major shareholder in any company

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BlinkyBill

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#2707759 15-May-2021 06:00

mattwnz:

How hard would it be for them to have a voting form on each shareholding, and the majority is then voted for on behalf of all shareholders?

The problem I see is that there could be less accountability for companies if a platform like this becomes a very large shareholder. Although wouldn't the same apply for some of these ETFs?

once again, SHARSIES CANNOT BE A SHAREHOLDER. You are discussing a problem that cannot exist.

SaltyNZ

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#2707767 15-May-2021 08:29

BlinkyBill:

I strongly suspect it’s been debated by people with scant knowledge of the subject.

Don't be ridiculous. This is the internet. Everyone here is an expert.

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OldGeek

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#2707775 15-May-2021 09:12

BlinkyBill:

once again, SHARSIES CANNOT BE A SHAREHOLDER. You are discussing a problem that cannot exist.

I transferred my shares in Vector into my Sharesies account (using Settings/transfer). I am no longer listed on the Vector share register. Clearly the shares still exist and are held by someone on that register. If not by Sharesies Nominee Ltd then who?

I will re-word my original question - if a company has a sizeable percentage of their shares owned by those who bought through Sharesies, how is this handled given that those buyers do not appear on the company share register?

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BlinkyBill

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#2707786 15-May-2021 10:11

OldGeek:

BlinkyBill:

once again, SHARSIES CANNOT BE A SHAREHOLDER. You are discussing a problem that cannot exist.

I transferred my shares in Vector into my Sharesies account (using Settings/transfer). I am no longer listed on the Vector share register. Clearly the shares still exist and are held by someone on that register. If not by Sharesies Nominee Ltd then who?

I will re-word my original question - if a company has a sizeable percentage of their shares owned by those who bought through Sharesies, how is this handled given that those buyers do not appear on the company share register?

Cripes, it is this hard?

Step-by-step:

1. Old Geek owns the vector shares under his/her own CSN

2. Old Geek sets up, via a Sharsies subscription, an account in the Sharsies custodian Sharesies Nominees Ltd; an arrangement regulated by the NZ Govt, lets call that account OG1. OG1 is owned in whole by Old Geek and managed by SNL, per those regulations.

3. Old Geek transfers vector shares from CSN to OG1.

4. SNL manages the vector shares including all investor engagement with vector, on behalf of Old Geek via the OG1 account, which Old Geek owns per the custodial services regulations of NZ

5. To save money relative to the platform, Sharesies has elected not to forward on some investment services to Sharesies subscribers (e.g. offers, annual reports), but does forward on some (e.g. dividend payments, share splits). This agreed to by Old Geek when setting up the Sharesies subscription.

6. If Old Geek wishes to engage with vector fully with all investor activities, he/she will have to set this up separately with vector, referencing the OG1 account.

Here’s a question for you - does Sharesies Nominees Ltd appear on the share register for Vector?

BlinkyBill

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#2707831 15-May-2021 10:20

Well, to answer my own question, Custodial Services providers do appear on the list of shareholders for Vector. I’d need to look into this but I suspect its for reporting purposes.

OldGeek

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#2707912 15-May-2021 12:52

BlinkyBill:

Well, to answer my own question, Custodial Services providers do appear on the list of shareholders for Vector. I’d need to look into this but I suspect its for reporting purposes.

So the question really is whether a 'Custodial Services' shareholder has the same rights and obligations as a normal shareholder.

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OldGeek.

Quic referal code: https://account.quic.nz/refer/581402

BlinkyBill

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#2707917 15-May-2021 13:22

OldGeek:

BlinkyBill:

Well, to answer my own question, Custodial Services providers do appear on the list of shareholders for Vector. I’d need to look into this but I suspect its for reporting purposes.

So the question really is whether a 'Custodial Services' shareholder has the same rights and obligations as a normal shareholder.

No, because they don’t own the property. So the custodian can’t for example, vote a Board Member on/off unless so instructed by the owner of the share, in which case they are doing so by proxy. Obviously, custodians don’t generally offer the service of acting on behalf of the owners in this way.

Again, and again, the Custodian is acting on behalf of the shareholder in trust; the Custodian is not the owner of the property. There can’t be two owners of the same property.

I haven’t quite got to the bottom of this but it seems like reporting the Custodial Services provider on the list of shareholders is required for disclosure / transparency purposes; so as to properly disclose who owns what in percentage terms of the 100% of shares on issue.

The relevant act is this: “Custodial services is defined in Section 77B(1)(b) of the FA Act as including:
‘the holding of client money or client property by a person (A) in trust for, or on behalf of, a client (C), or another person nominated by C, under an arrangement between A and C or between A and another person with whom C has an arrangement (whether or not there are also other parties to any such arrangement).’”

In trust for or on behalf of.

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Smpl Mnmlst
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#2707919 15-May-2021 13:47

Not sure if a tangent has been gone onto above - but Custodial Services Limited is the custodial services company belonging to Craigs Investment Partners Limited, based in Tauranga. CSL probably represents the shareholdings of Craigs’ investment advisory clients.

CSL shows as a shareholder in Vector Limited on the Companies Office website only because it comes within the list of 10 largest shareholders in Vector - it’s not showing there because of the nature of CSL or what services it performs.

To the best of my knowledge, CSL has nothing to do with Sharesies and is not mentioned anywhere on Sharesies’ website. As noted above, all Sharesies’ investments and money are held on bare trust by a separate custodian company called Sharesies Nominee Limited.

If you had the full list of Vector shareholders you would probably see Sharesies Nominee on it - but at this point it looks like it’s not a large enough shareholder to make the cut on the Companies Office website or in the ‘top 20’ in the Vector Annual Report. The same probably applies to Sharesies in respect of all or most companies on NZX.

Sometimes I just sit and think. Other times I just sit.

antonknee

1133 posts

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#2708299 17-May-2021 08:58

BlinkyBill:

mattwnz:

How hard would it be for them to have a voting form on each shareholding, and the majority is then voted for on behalf of all shareholders?

The problem I see is that there could be less accountability for companies if a platform like this becomes a very large shareholder. Although wouldn't the same apply for some of these ETFs?

once again, SHARSIES CANNOT BE A SHAREHOLDER. You are discussing a problem that cannot exist.

I think the poster is referring to them as a shareholder as short hand - nit picking that isn't helpful to the point of the discussion. My understanding is that in any case, you remain the beneficial owner of the shares however legal title is held by the custodian on your behalf, which is why they and not you appear on the registry.

Shares managed by custodians are often not voted, which potentially means a significant portion of the shares of any given company do not vote. The same is true for a number of custodians, not just Sharesies Nominee Ltd. This could because like Sharesies they don't offer the service, or they do offer it but the beneficial owner does not specify how they wish to vote (which they must do so for the custodian to cast a vote).

Imagine a company where 51% of the shares are held by SNL, CSL, FBCL, Adminis etc - that's a lot of shares that are likely not being voted on.

OldGeek

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#2712279 24-May-2021 14:46

I approached the NZX on this and the upshot of an explanatory phone call is that the situation with SNL and other similar custodial shareholders, along with ETF's (about which I know nothing), is potentially a problem. Where their shareholding is substantial there is a problem with shareholder approval processes (company constitutions stipulate when shareholder approvals are required) given that they either do not vote or assign their vote by proxy. Such organisations (eg SNL) own a single block of shares on behalf of all their investors (ie Sharesies members), in a company. If they choose to participate in a shareholder election they can only vote the entire block (or not).

My concerns about significant levels of shareholding by custodial services such as SNL were accepted as valid (see an earlier post from me on this), but the NZX is yet to consider if any action is required.

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OldGeek.

Quic referal code: https://account.quic.nz/refer/581402

OldGeek

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#2782124 22-Sep-2021 13:07

I have continued research on this issue and I am still not clear on what will happen if Custodial services (such as Sharesies Nominee Ltd) are either cumulatively or singularly major shareholders in any one company. There appears to be no statutory requirement for Custodians to participate in shareholder votes or takeover offers. Abstention gives greater control to direct shareholders, and potentially means that takeover offers cannot reach the 90% acceptance threshold for compulsory acquisition of remaining shares.

Sharesies have indicated that with Tilt Renewables takeover they offered Sharesies customers an option to accept or decline. As I was not a Tilt shareholder I have no direct experience of how this was done. However Sharesies have indicated they will not always do this with takeover offers.

I have got to the point where questions to Sharesies and the NZX remain unanswered in the detail I am seeking.

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OldGeek.

Quic referal code: https://account.quic.nz/refer/581402

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