Alliance Trust has defeated a bid to force it to control its share price discount on an automatic basis and abandon provisions to scale up votes from its savings scheme members.
At the company’s annual general meeting last week, shareholders were asked to vote on the two issues after the resolutions were requisitioned by activist hedge fund Laxey Partners.
The trust’s board recommended they vote against both proposals.
A total of 66.5 per cent of votes were cast against the adoption of a rigid discount control mechanism and 68.8 per cent opposed the removal of Alliance Trust’s provisions to scale up votes from its savings scheme members.
Under the provisions, members who do not vote actively on a resolution automatically contribute votes in proportion to the way that other scheme members have voted.
Chairman Lesley Knox says: “I would like to thank all our shareholders for voting today and for their continued support of Alliance Trust.
“The close to 60 per cent turnout we saw at this year’s AGM was unprecedented, being nearly double our normal turnout.”
Knox says the trust will continue to buy back shares on a flexible basis in the months ahead to adjust the discount at which it trades to the value of its investments as well as the level of the discount relative to the peer group.
However, Laxey Partners claims the voting result is a victory of sorts as Alliance Trust has committed to introducing “a form of discount control mechanism”. It says the discount of the peer group, the AIC global growth, stands around 8.5 per cent and says Alliance Trust will have to bring its current discount of 14.1 per cent down towards that level.
Yellowtail Financial Planning managing director Dennis Hall says: “Discounts are always going to exist in the investment trust world and managers can manipulate them through buybacks and so on but these are short-term, artificial tools. The market will decide what the value of the shares are at any particular time.”