Fund manager abrdn forced to delay shareholder vote over paper shortage

Supply chain issues that have apparently created an international paper shortage have forced UK fund manager abrdn to delay a shareholder vote on a planned £1.5 billion ($2 billion) takeover of the Interactive Investor stock selection platform.

The deal is the biggest since the company, which changed its name to abrdn last year, was formed from the £11 billion merger of Standard Life and Aberdeen Asset Management in 2017. There was no statement from abrn but he said the details, first reported by Sky News, were correct.

The problem arose because UK takeover rules require companies to send paper versions of documents to shareholders – and abrdn has over a million retail investors, making it a huge company. The company had wanted to hold the vote on the deal before releasing its annual results, but paper shortages mean that won’t happen until around two weeks later, sources quoted by Sky News say.

A spokesperson for abrdn told the outlet: “We would have liked to issue the shareholders’ circular a little earlier, but we had to work around paper supply issues as we have to write to over a million shareholders.”

Shareholder engagement could suffer

Commenting on the story, Kerry Leighton-Bailey, director of shareholder engagement at AGA provider Lumi, described the paper documents rule as “outdated” – especially in light of the rapid shift to virtual that has had place since the start of the Covid-19 pandemic.

“Companies have found new ways to engage with shareholders during this time – by hosting virtual and hybrid general meetings as well as facilitating virtual proxy voting,” she says. “So it seems outdated that the rule for distributing paper documents to shareholders is still in place. These materials should be available as digital assets and distributed accordingly, to improve the efficiency of the process and ensure that shareholders are kept up to date with critical information in a timely manner.

Nor do companies need to employ breakthrough technologies to modernize. Leighton-Bailey points to the Financial Reporting Council’s article Corporate Governance AGMS: An opportune for change, published in October 2020, stating that even something as simple as providing email addresses when buying new shares would improve engagement and facilitate communication.

“If the rules are not changed and companies are unable to modernize this process, it is likely that delays will continue and shareholder engagement could suffer,” she warns.

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