Companies get into trouble for all sorts of reasons. Shareholders have a duty of care to ensure the best possible outcome for all stakeholders.
When the shareholders, many of them retail shareholders, work with a company to find a win/win option, they should be able to rely on the Regulator to be consistent. In this case, the FCA has been erratic.
AMIGO HOLDINGS PLC wants to compensate its creditors but risks insolvency if it does so. The company members and creditors have voted to accept the plan that reduces compensation in the short term but enables the company to survive with the promise of further compensation from future profits.
The FCA felt this option was not good enough but had agreed to not intervene in any legal hearing if the plan was accepted by creditors and shareholders. At a very late stage, the FCA did intervene. The vote was de facto ignored. Shareholders are described as not wanting to take their equivalent of the pain, a ‘haircut’ in equity value.
A contributory factor to overturning the vote appears to be a significant misunderstanding of who retail shareholders are and what retail shareholding is – the people who wish to achieve and retain personal, financial independence whilst providing companies with capital to provide goods and services to society. In this particular case, this includes those who are marginalised from mainstream financial services.
Amigo Shareholders’ Action Group’s (ASAG) letter to the FCA and the judgement can be found here. The response from HM Treasury is here.
