Will we see more shareholder activism following Brexit?

The UK M&A market is now seemingly more attractive to overseas investors who can benefit from the combined effect of market volatility and sterling weakness.

16 September 2016

The simple answer is yes.  The UK market looks attractive to activist investors based outside the UK who can benefit from the combined effect of:

  • market volatility
  • sterling weakness.  

These factors may encourage more stakebuilding in quoted companies and opportunistic bids where share prices have dropped to attractive levels. This “Brexit discount” may mean that new names appear on your shareholder register. Those new shareholders may be more willing to use the activist investor toolkit than conventional UK institutional investors.

The options for activist investors include:

  • Requisitioning a general meeting: shareholders can require the directors to call a general meeting of the company. The directors must call a general meeting once the company has received requests to do so from shareholders holding at least 5% of the paid-up voting share capital of the company
  • Requisitioning a resolution to be put to an AGM: shareholders can require the company to propose additional resolutions at the next annual general meeting. A company must give notice of a resolution once it has received requests from:
    • shareholders holding at least 5% of the total voting rights or
    • at least 100 shareholders holding shares in the company on which there has been paid up an average sum, per shareholder, of at least £100.
  • Requiring circulation to shareholders of statement by shareholder activist: shareholders who meet either the 5% test or the 100 in number test can require the company to circulate to shareholders a statement of not more than 1,000 words relating to any resolution or other business to be dealt with at the general meeting. The use of this right tends to be restricted to AGMs. Shareholder activists generally prefer to issue separate statements which are not subject to any word limit and which do not form part of a circular prepared and controlled by the company.

If you would like to discuss what this means for your company and how you should respond if an activist investor takes an interest in your company please contact Nick Graves or Dominic Davis at Burges Salmon.

Key contact

Nick Graves

Nick Graves Partner

  • Head of Corporate
  • Corporate Advice
  • Mergers and Acquisitions
  • Reorganisations and Demergers

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