Rights issues

So what happens to the Nil Paids that are auto-credited (unilaterally) in to Freetrades CREST account by the Registrars? I presume they will now be forced to lapse and credit shareholders with lapsed rights proceeds?

Good question Finki and unsure on what FTs obligations on this are. I assume that, as you say, the value of the rights will simply be credited to FT. Looks like FT are pocketing the value of rights instead of users which feels wrong. I wonder whether anyone has any info on whether notifying shareholders, or beneficial owners, is a legal requirement or not? I feel like rights issues should be (if they are not already) a fiduciary responsibility…

We were given the option on ITM Power a while back and told to make sure we had the funds available and asked how many shares we wanted. Just shows it is possible but very manual I think which will be the issue. Same with the just eat merger, they set up a google form to collect votes.

They’re not. But they may not be reflecting the nil paids on clients accounts or offering the option to elect to take up the rights. When the nil paids lapse FT will 100% pay you the value of the lapsed rights proceeds.

2 Likes

Very good to know, thank you Finki. I love FT and haven’t had a rights issue before so I’m pleased that I’ll end up with the nil paid value. Phew! Thanks again

I’d like to attend the next shareholder meeting of one of my holdings. Not possible, since at FT we are only the “beneficiary shareholder”, not the “nominee shareholder”. We are not privy to the shareholder number, which in any case, identifies the latter, not the former. We have no corporate action rights (see clause 24.1 of the T&Cs).

As nominee shareholder for all its clients holdings, FT must have some pretty major voting power! Clearly holding shares via FT is less valuable than via its competitors. Any timescales to fix this?

I don’t think this going to be “fixed”. It looks like an active decision made by management.

They used to offer these back when they had far less stocks. I guess its a decision based on how manual it is, until they can automate it.

1 Like

I think this is directly related to the fact that holding and trading shares via FT is cheaper than via its competitors. You get what you pay for.

There is a good table at the link below that shows you how some other platforms handle shareholder voting. I was surprised to read that more platforms support shareholder voting than I thought would be the case! If voting your shares is important to you, one of those platforms might be a good alternative.

https://www.theaic.co.uk/availability-on-platforms/shareholder-voting-consumer-platforms

The voting issue is a systemic one, though, and there’s an association campaigning for a change to the situation (among other things). See their analysis here: Nominee Accounts - Sharesoc

2 Likes

“holding and trading shares via FT is cheaper” - debatable. Buy-and-hold ISA owners pay less at iWeb, have a broader range of stocks than FT (non-plus), and get full corporate action rights.

You might get full corporate action rights for your shares at iweb but it’s way more expensive than FreeTrade. For a s&s isa there’s a £100 account opening fee and £5 dealing commission per trade.

“£5 dealing commission per trade” - buy-and-hold investors rarely pay that, so cheaper than FT’s £36 PA or much cheaper than Plus. “£100 opening fee” - for people who’ve already got an account, that’s a sunk cost. Zero reason to switch to FT.