I’m not big into capitalism nor the procedures that have been designed to allow capitalism to work, so I’ve never witnessed nor experienced a shareholders General Meeting when they decide whether or not to sell or buy a company before.
Well following today I can tick that off my bucket list!
Dee Valley Water held an EGM earlier today at the Ramada, Wrexham, where the shareholders were voting on whether or not to agree to accept Severn Trent’s whopping £87m bid to buy the company. I was allowed to be a guest at the meeting.
Now just because I’ve attended one such meeting it doesn’t make me an expert on the matter! And I’m in no way pretending to be, so I’ll try my best to explain the situation as I understand it.
Approximately 150 shareholders were present. The vast majority of them local people, family and friends in fact of DVW staff. These (or most of them) have only bought their shares in the last few months. They are referred to as Transferee Shareholders or Transferee Shares.
Each of these have a share in the company – nothing much, one or two, but a share nonetheless.
The major shareholders, Axa, Aviva and others weren’t present. They cast their votes by proxy.
My understanding is that this particular sale is unusual. In Dee Valley Water’s Case, for whatever reason, for the sale to go through it needs to pass two tests: firstly that 75% of shares by value agree to the sale, and secondly, and crucially, it requires a simple majority (50% +1) of the shareholders to agree. So in this second test Axa, with its 1m shares/25% of shares would count as only 1 vote. Mrs Davies with her 1 share would also count as 1 vote.
We were informed that the proxy votes had already been counted, and that 87% of them were in favour of the sale. This suggests that the first test will pass.
But what of the second test?
The fact that so many of the shareholders who were present were local people, and that there were so many of them suggests that the second test would in all likelihood fail.
If the bid isn’t successful in both tests it falls.
But here’s the thing.
Yesterday shareholders were informed that the votes of some of them might, in fact, NOT be counted. More specifically the votes of Transferee Shares – predominantly the families and friends who had bought shares in the best interests of the company, the workforce and the community it serves.
This message was once again read out at the beginning of the meeting this morning.
In the event of the second test not being passed (simple majority of shareholders in favour of the bid), it will be up to the Court to make a judgement on whether or not Transferee Shares should be counted. If the Court rules that they are counted then in this event the bid falls. If the Court rules that they should not be counted, then the likelihood is that the bid succeeds.
Now I’ve already admitted that I’m not an expert in these processes, and I have even less knowledge of corporate law. But it seems completely unfair to me that some shareholders votes might be discounted.
I don’t know on what grounds a Court could decide against these shareholders, but the message is that some shareholders are more valuable than others.
Furthermore, rightly or wrongly, it smacks of a stitch-up, designed to deny the friends and families of the Dee Valley Workforce their legitimate voice.
And this is important.
It’s important because throughout this process the view of the workforce, the service users, and the communities impacted by this decision have been ignored completely.
Water is one of life’s essentials, and yet here it is nothing more than a commodity to profit from.
This whole process highlights the fact that there is something morally and ethically wrong with the way that our society treats such important issues.
We are merely onlookers as business people from far and wide who have never visited the Dee Valley and don’t really care about the area nor its people ponder about owning one of our natural resources and making a profit from it.
This is why in this instance it’s important that the Court rules in favour of the Trasnferee Shareholders and allow their votes to be counted.
In the longer term the UK Government (water is not devolved, yet) needs to look at this, and ensure that Water is not merely a commodity. Ownership and control of our water resources should be in the interest of the people, not in the interest of the markets.