Supply-chain issues that have apparently created an international paper shortage have forced UK money manager abrdn to delay a shareholder vote on a planned £1.5 bn ($2 bn) takeover of stock-picking platform Interactive Investor.
The deal is the biggest since the company, which changed its name to abrdn last year, was formed from the £11 bn merger of Standard Life and Aberdeen Asset Management in 2017. There was no statement from abrdn but it 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 more than 1 mn retail investors, making this a huge undertaking. The firm had wanted to hold the vote on the deal before it reports annual results but paper shortages mean it now won’t happen until around two weeks later, according to sources cited by Sky News.
An abrdn spokesperson told the news outlet: ‘We would have liked to get the shareholder circular out a little earlier but have had to work around the paper supply problems as we are required to write to more than 1 mn shareholders.’
Shareholder engagement could suffer
Commenting on the story, Kerry Leighton-Bailey, director of shareholder engagement at AGM provider Lumi, described the paper documents rule as ‘outdated’ – especially in light of the rapid shift to virtual that has taken place since the start of the Covid-19 pandemic.
‘Companies found new ways to engage with shareholders during this time – by hosting virtual and hybrid AGMs as well as facilitating virtual proxy voting,’ she says. ‘It therefore feels outdated that the rule on paper documents being distributed to shareholders is still in place. These documents should be available as digital assets and distributed accordingly, to improve the efficiency of the process and to ensure that shareholders are kept updated of essential information in a timely manner.’
Companies don’t need to employ groundbreaking technologies in order to modernize, either. Leighton-Bailey points to the Financial Reporting Council’s paper Corporate governance AGMS: An opportunity for change, published in October 2020, as saying that even something as simple as providing email addresses when new shares are bought would improve engagement and make communication easier.
‘If the rules aren’t changed and companies are unable to modernize this process, it’s likely delays will continue, and shareholder engagement could suffer as a consequence,’ she warns.