Equiniti's annual gathering for the share registration community this year took place against the backdrop of the uncertainty that a general election and a new government bring, ongoing regulatory change, and a business world adapting daily to the possibilities and challenges being thrown up by new technologies.
Around 130 delegates attended the Share Registration Conference at the Ham Yard Hotel in London on September 30th to hear five very stimulating and informative talks.
Alastair Cowie, Assistant Director, Corporate Law and Governance at the Department for Business, Innovation and Skills (BIS), laid out the new government's business agenda and updated on the progress towards dematerialisation.
Amanda Mellor, Group Secretary and Head of Corporate Governance at Marks and Spencer PLC, described the work they and Equiniti had carried out to launch the new and industry first Dividend Plus scheme.
Professor Howard Rush from the Centre of Research in Innovation Management at the University of Brighton led a fascinating session on unlocking and managing innovation, before Equiniti's IT Director Kevin Hepburn and Andrew Japp of Webcredible discussed the vital role of mobile technology in communicating with today's shareholders.
A busy afternoon of market insights was rounded off with some observations on the current political scene and the landscape for UK listed companies from one of Britain's most respected journalists, Group Content Director at the Independent and Evening Standard newspapers, Chris Blackhurst.
Stuart Ellen, Managing Director, Equiniti Registration Services, took the opportunity to welcome many new share registration customers and confirmed a renewed focus on helping to support Equiniti's clients through change with more resources being applied to industry issues and new client forums set to be launched.
Here are a dozen of the key takeaways from the day:
1. Amid a growing demand to move away from annual general meetings (AGMs) being conducted in a face-to-face meeting, one Equiniti customer has established that there is no legal requirement for a physical meeting at a specified location and will be conducting a virtual AGM in 2016. Equiniti's Stuart Ellen said he was happy to explore options for alternative forms of AGM with anyone interested.
2. A recent ONS survey of UK quoted shares, managed by Equiniti Investor Analytics, showed a small, but potentially significant, rise in the proportion of individual shareholders from 10% to 12% for 2014. It is too early to say whether this is simply the result of a prolonged period of low interest rates or if it marks a reversal of the long-term reduction in this type of shareholder.
3. BIS remains open minded about the best approach to achieving dematerialisation with an emphasis on retaining and strengthening the rights of existing shareholders. Alastair Cowie said the Direct Record Model (DRM) originally proposed by the registrars, which replaces the certificates with electronic holdings, provides one attractive solution. But he added that "the devil is in the detail" and BIS is talking with industry stakeholders to identify and eradicate weaknesses in the model and will consider other options. "We know investors will want to have a choice about how they hold. DRM may be one of a number of options," he added. BIS expect to publish a consultation covering the how and the when by the end of this year.
4. The Shareholder Rights Directive is now at the trialogue stage. Alastair Cowie suggested that while agreement may be reached by December 2015 it was possible that negotiations would continue in the first half of 2016.
5. Amanda Mellor set the scene for explaining Marks and Spencer's innovative new value added dividend scheme by describing the company's unique register with 30% owned by private individuals and 90,000 shareholders (around half of the total) owning less than 500 shares (10,000 actually own less than 10 shares). She said many of their shareholders may be small, but they are very passionate and very vocal.
6. Driving the innovation in Marks and Spencer's dividend scheme, which now provides shareholders a gift card purchase option, was a desire to bring some of the money paid out each year back into the business whilst also rewarding loyalty.
7. Professor Howard Rush from the University of Brighton explained how innovation must go far beyond invention. True innovation involves constant improvement as well as finding new ideas, exploring them, selecting them, realising them and, importantly, exploiting the benefits to create maximum value for all stakeholders.
8. Those companies that use innovation to differentiate their products and services are on average twice as profitable as those that do not. Professor Rush pointed to a study conducted in Switzerland, which researched a large sample of firms over a six-year period showing that companies spending more on, for example, research and development, actually grew more in terms of employment.
9. “Retail banking will change dramatically in the next five years” said Kevin Hepburn at Equiniti. By 2020 the number of transactions taking place in branches is expected to be 268 million versus more than 2 billion transactions taking place on mobile phone. Source: BBA. (https://www.bba.org.uk/news/press-releases/mobile-phone-apps-become-the-uks-number-one-way-to-bank/#.Vg1Ip5ggl1s)
10. It is vital that you put the customer at the centre of your decision-making when it comes to shareholders managing their accounts online, said Andrew Japp. Customers want to engage with their share management at any point in the day and want to do it in an intelligent way. So, it is vital that they can access this information across all channels, and that responsive design makes this easy for them.
11. Business still has very few friends in politics and has allowed itself to become a popular whipping horse for the left and right, warned Chris Blackhurst. "The Conservatives will want to take some of Jeremy Corybn's clothes, and one of those that is a very easy fit is to carry on smashing business. So, expect far more rows about directors' pay awards, far more on companies not paying their taxes, all the things that have been levelled at business."
12. But finally ... more of the same is not such a bad thing, concluded Chris Blackhurst. "I do not see businesses being hammered unduly, the economy is growing and in better shape than it was, and there is still a lot to play for."